New York Comp Bill Details Murky

Insurance industry groups, while welcoming passage of New York's massive workers' compensation reform bill, noted today that the legislation leaves key details still to be decided.

In the measure–which won approval in the legislature on Tuesday, and is expected to be signed next week by Gov. Eliot Spitzer–a variety of issues are to be worked out administratively by the superintendent of insurance in consultation with three advisory groups.

Mike Moran, speaking for the American Insurance Association, noted that among the important areas where regulations are to be developed by the superintendent is a system of objective medical guidelines for determining disability.

Currently, New York permits lifetime permanent partial disability payments to injured workers. Mr. Moran said the new law would cap payments at 521 weeks in all but the most severe cases.

A “safety net” provision, said Mr. Moran, would allow the payments to continue if a worker is more than 80 percent disabled, and without a very precise set of medical guidelines “you're going to have an explosion of litigation,” he predicted.

According to the Business Council Of New York State, a key player in negotiations that led to up to the legislation, permanent partial disability cases had driven the state's comp costs to a level 80 percent above the national average.

Members of the advisory groups are to include one named by the Council, one by the AFL-CIO, one from the Democrat-controlled Assembly, one from the Republican-controlled Senate and two appointees named by the Democratic governor.

Frank O'Brien, regional vice president for the Property Casualty Insurers Association of America, said that going forward the direction the task forces take is “critical” to the ultimate success of the legislation.

“There are a lot of unknowns,” he said, but added that the measure has the potential to create “a sea change in the workers' comp system.”

The legislation also calls for possible replacement of the Compensation Insurance Rating Board, a nonprofit association of insurance carriers, which provides advisory workers' comp rates for the insurance superintendent.

Under the bill, the superintendent is to report to the governor and the legislature by September as to how the board has performed and whether its work should be performed by some other group or agency.

The current enabling legislation for the board would sunset Feb.1, 2008. What the superintendent recommends “will be an important determinant in how rates are made,” noted Mr. Moran.

Monte Almer, the rating board president, angrily rejected the idea that his operation is due for abolition. “It's a report the superintendent will be doing. Nothing else,” he said.

Another point in the bill, which is not in dispute, is the elimination of the Second Injury Fund, set up originally to help pay for World War II veteran's job injuries, which Gov. Spitzer's office described in a statement as something used by some insurance carriers as a “costly loophole to avoid paying claims.”

The bill would also increase penalties for workers' comp fraud, and increase minimum and maximum weekly benefits.