New York officials unveiled a series of workers' compensation reform measures that are intended to increase benefits for the injured and cut costs for employers.
New York Governor Eliot Spitzer today announced an agreement between the legislative and executive branches to reform the state's system that would increase benefits for injured workers over a four-year period. At the same time, employers' costs would be cut 10-to-15 percent and more over time.
"This is a remarkable win-win situation for both workers and employers," said Gov. Spitzer.
"By protecting workers and reducing the costs to businesses, this historic agreement establishes a more effective environment for economic development, and will spur job creation in the hard-pressed Western New York economy and throughout New York State," said State Assembly Speaker Sheldon Silver, D-Manhattan.
"The outdated system had long been an impediment to job creation and economic growth, especially in upstate New York," said James Tedisco, the Assembly's Republican Leader. "This is an important victory."
Under the plan:
o 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.
o The minimum weekly benefit will be increased from $40 to $100.
o 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.
o Programs will be established to return workers to work promptly.
o Strong anti-fraud measures will be in place, including the ability to stop work on a job site where workers' comp insurance has not been purchased.
o The Compensation Insurance Rating Board will sunset as of Feb. 1, 2008. The superintendent of insurance will determine what, if any, replacement should be recommended.
o The Second Injury Fund--established to help injured World War II veterans--will be closed. Some carriers have used it to avoid paying claims.
The superintendent of insurance has been directed to ensure that savings from these reforms are captured in premium rate reductions with the next rate setting cycle this July.
The governor's office said that reductions in premiums and assessments related to the Second Injury Fund are expected to reach double-digit levels, providing significant relief to the state's business community--especially small employers.
As part of the reforms, the superintendent of insurance will:
o Collect data on system costs.
o Design a system to expedite the hearing process.
o Design fact-based medical guidelines to replace current outdated system and design treatment guidelines and training for law judges.
"We are pleased that the governor and legislative leaders have tackled this important issue, however the devil is always in the details," Gary Henning, assistant vice president for the Northeast Region with the American Insurance Association, said in a statement.
"We need to carefully review this measure so we know exactly how the cost savings will be generated," he added. "AIA is hopeful that this legislation will result in meaningful cost savings. Injured workers, employers and insurers all benefit from a stable, predictable workers' compensation system and a competitive marketplace."
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