Completion of Medical Impairment Guidelines Workers' Compensation (S.4014/A.5977)

Date: 2017

S.4014 (DeFrancisco)

A.5977 (Woerner)

MEMORANDUM IN SUPPORT

Unshackle Upstate, a non-partisan, pro-taxpayer, pro-economic growth, education and advocacy coalition made up of business and trade organizations from all parts of Upstate New York, supports this legislation.

This bill would amend the workers' compensation law relating to the impairment guidelines for scheduled loss of use award.

High Workers’ Compensation costs present a significant hardship to New York employers and continue to escalate. This past year alone, the basis for Workers’ Compensation costs increased over 9 percent, continuing a near decade of increases, in some cases premiums increased by almost forty percent.

One of the primary drivers of the state’s high workers’ compensation costs are injuries subject to Scheduled Loss of Use Awards (SLUs). Injuries to extremities for example, which are subject to SLU awards, base benefits on a multiplier of statutorily designated weeks, type of injury and declared severity, rather than lost work time. This approach has led to the awarding of enormous awards for injuries that required no lost-time from work. In 2006, $509 million in SLU benefits were paid system-wide in New York State; by 2015, the cost of SLU awards had grown to just over $1 billion.

In recent years, New York State embarked on a project to modernize the SLU rating system by updating the applicable medical impairment guidelines. These guidelines have not been substantially updated in over three decades. As a result, levels of impairment and payments don’t reflect the dramatic advancements in surgery and other medical treatments that have occurred over the last several decades, inflating SLU award costs.

This legislation compels New York State and the Workers’ Compensation Board to updated and modernized impairment guidelines and will bring New York State’s workers’ compensation system into the 21st century.

Unshackle Upstate and its partner chambers and associations recently conducted a survey of 211 employers that requested feedback on workers’ compensation costs; 83% of participants identified workers’ compensation costs as a significant concern, with many reporting average annual cost increases of ten and twenty two percent over a five year period.

According to the 2016 Oregon Workers’ Compensation Premium Rate Ranking Summary, a national study conducted by the Oregon Department of Consumer and Business Services that puts individual states’ workers’ compensation rates on a comparable basis, New York State employers pay the third highest workers’ compensation premium rate in the United States; New York ranked 19th in 2008 and 13th in 2010.

The growing cost of workers’ compensation coverage is one of the biggest business and competitiveness concerns facing New York’s employers. These immense costs impact all New York employers including for-profits, non-profits, schools, municipalities and state government, placing additional burdens on taxpayers.

For these reasons, Unshackle Upstate supports the enactment of this legislation.