New York Reforms Workers' Comp Law

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

The Business Council Of New York State–a key player in negotiations that led to the legislation's passage–said permanent partial-disability cases had driven the state's workers' comp costs to a level 80 percent above the national average.

Members of the advisory groups set to work with the superintendent include one named by the Business 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 that 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 on 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 new law that 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 as well as increase minimum and maximum weekly benefits.

Under the legislation, which Gov. Spitzer made a top priority in his new administration, injured worker benefits will increase for the first time in more than a decade, while reducing employer costs by a projected 10-to-15 percent. Weekly benefits will increase from a minimum of $40 to $100, and the maximum will rise from $400 to $500.

In a statement released after he put his signature on the bill, Gov. Spitzer noted that New York's workers' comp premiums have been among the highest in the nation, despite low weekly benefits for injured workers.

"Workers' compensation reform is a critical component of restoring the state's competitiveness. Today, New York is reversing a trend that hampered business growth for years, and we are better protecting workers in the event of job-related injury," he said.

In a letter to Acting Insurance Superintendent Eric Dinallo, Labor Commissioner Patricia Smith and Workers' Compensation Board Chair Donna Ferrara, he said the new law will reform "a long broken workers' compensation system."

The governor also announced that he has asked Mr. Dinallo to ensure that savings in the workers' comp system are translated into reductions in insurance premiums.

The legislation drew expressions of support and praise from Assembly Speaker Sheldon Silver, D-Manhattan; Senate Majority Leader Joseph Bruno, R-Brunswick; Kenneth Adams, president of the New York State Business Council; and Denis Hughes, president of the New York State AFL-CIO, among others.