PIANY Comp Study Finds Areas For Change

Reform of the New York workers' compensation system should include an increase in payments to injured workers and changes to make the process of securing benefits less adversarial, according to an agent group study.

The findings by the Professional Insurance Agents of New York State Inc. in Glenmont, N.Y. were unveiled today as proposals for legislative reform are in legislative limbo.

Republican Gov. George Pataki had included a revision of the comp system among his January budget proposals, but they were removed in the course of negotiations with the Democrat-controlled Assembly and Republican-dominated Senate.

“New York should look at a number of areas to preserve workers' comp as a true 'no-fault' system providing workers' sole remedy for employment-related injury or illness. We should strive to preserve and enhance worker benefits, prevent work-related disability and reduce inefficiency and fraud,” said PIANY's president, J. Carlos “Shawn” Via?a.

The year-long study was overseen by PIANY's president-elect, David Dickson, who developed its recommendations in discussions with parties from diverse groups affected by workers' compensation.

“We decided to look at the system objectively, with a fresh perspective. As agents, we know how insurance policies are supposed to work,” Mr. Dickson explained. “Compared to other policies delivering similar benefits–such as auto insurance no-fault payments, life, health and disability insurance–New York workers' compensation policies function very inefficiently.”

The PIANY study recommends that the state study several areas to save and contain costs, starting with workplace safety.

PIANY noted that two safety-oriented programs were enacted in the state's comprehensive 1996 workers' comp reform package, but were never implemented.

According to PIANY, both programs could have saved employers money on their premiums for adopting safety programs and investing in safety equipment.

Currently, New York's only safety plan provisions function as a punishment for poor experience, not an incentive, according to PIANY. The best win-win imaginable would be measured in reduced occupational injury and illness, the group said.

PIANY also called for the state to tone down the confrontational nature of its system. The study found that compared to other jurisdictions, New York's workers' comp system is extremely adversarial.

PIANY reported that the New York comp adjudication structure pits insurers against claimants, which the group said is not appropriate for a no-fault system.

According to PIANY, too many claims are controverted and the process dragged out, leaving workers feeling betrayed and employers marginalized, leading to less-than-optimum outcomes.

The PIANY report found an extraordinary level of mistrust prevails among all parties associated with workers' comp.

PIANY urged the state to look at cases brought under Sections 240 and 241 of the state's Labor Law in the context of the “sole remedy” principle of the workers' comp system. Injuries covered by Sections 240 and 241 of the Labor Law can lead to suits in which employers cannot even assert reasonable defenses, according to PIANY.

In the association's view, these sections of law originally were designed to protect workers from neglect of safety procedures in certain workplace conditions. Thus, it would make sense to consider changes to their provisions in conjunction with potential incentives contributing to a greater emphasis on safety, the group said.

PIANY's study also pointed to what it said is a lack of oversight and transparency in the collection of data and the rate filing process, as well as outright fraud.

Significant levels of fraud occur among certain members of all groups associated with workers' comp, PIANY reported.

PIANY said the system could benefit from more advanced technology. “One third-party administrator that PIANY spoke with says it finds errors in approximately 60 percent of workers' compensation billings,” Mr. Dickson noted.

In his view, safeguards should be built into electronic billing system software so that charges for coded procedures must match the reimbursements provided for in the workers' comp medical fee schedule.

He also said patterns of errors or questionable treatment protocols can be tracked more efficiently using an electronic system. PIANY recommended that medical providers should be required to move quickly toward electronic billing for workers' comp claims.

A number of bills are in the legislature now–including Gov. Pataki's failed effort–but none of those from individual legislators are comprehensive in nature or seem to have any momentum, according to Ellen Keihl, PIANY's assistant executive director for government and industry affairs.

The PIANY, she noted, has not been involved in drafting any major reform legislation at this point because “we're trying to stay objective,” she said.