Duration Cap Reform Workers' Compensation (S.4520/A.6602)

Date: 2017

S.4520 (Akshar)

A. 6602 (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 ensure that an injured worker's schedule of compensation begins on the date of their specified injury.

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 and in some cases premiums increased by almost forty percent.

A major deficiency of the 2007 reform legislation was the lack of criteria for commencing duration caps on permanent partial disability (PPD) benefits. As a way to pay for significant increases in injured worker weekly benefits, the legislation “capped” PPD payouts at 10 years. Unfortunately, the start date of the 10-year period can vary considerably at considerable cost. This has led to an excess payment of total temporary disability (TTD) benefits.

This shortcoming in the 2007 legislation creates additional costs not limited to benefit payments. These include additional utilization of unnecessary medical services used to justify remaining on temporary total disability, as well as the additional cost of legal involvement and hearings.

This legislation would significantly decreasing the cost of claims by commencing the durational cap at the date of injury, also promoting efficiency in the system, reducing hearings, litigation, and independent medical examinations, while allowing cases that are outliers to be properly adjudicated. This was the spirit and intent of the 2007 legislation, but the lack of effective implementation has resulted in significantly increased TTD and frictional costs.

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.