NEW YORK STATE BUDGET INCLUDES
WORKERS’ COMPENSATION REFORMS
On April 10, 2017 the New York State Senate passed the State’s Budget and associated bills, including Senate Bill S2009C, which provided changes to the New York Workers’ Compensation Law. In this article, we briefly discuss three dramatic changes outlined in the Bill and the potential impact on the defense of Workers’ Compensation matters as well as the carriers and self-insured employers.
Lowering of the Safety Net Threshold
A significant change brought about by Bill S2009C is to Section 15 of WCL, which lowers the safety net threshold, from 80% to 75%, for a permanent partial disability (PPD) classification and re-submission due to extreme hardship. The 2007 reforms placed caps on PPD classification; however, same was subject to an extreme hardship exception. Essentially, claimant’s classified at 80% LWEC (loss of wage earning capacity) and above, were able to apply to the Board alleging extreme hardship and petition the WCB for a reclassification within one year of the termination date of the indemnity benefits. As a result, the classification has a potential to result in either a permanent total or total industrial disability classification entitling claimant to lifetime benefits.
Now that Bill S2009C has lowered the threshold to 75% LWEC, the safety net is open to a whole new class of claimants. Of significant note, Bill S2009C specifically states that the lowering of the threshold applies to all active WCB cases as of April 10, 2017 despite the date of accident. Undoubtedly, this lowering of the safety net threshold will open the flood gates to more claimants who will seek extended PPD benefits which have a significant potential for increased exposure to carriers and self-insured employers.
Furthermore, Bill S2009C does not stop at just lowering the threshold, it also provides the claimant with the right of appeal to the Full Board in the event claimant’s LWEC is determined, at the Board level as well as the initial appeal level to be below the safety net threshold (75%). Essentially, while the appeal to the Full Board Review used to be discretionary, this Bill now affords claimants to appeal as a matter of right. Specifically, if a PPD claimant is classified anywhere between 75% to 99% LWEC at the trial level, and the carrier challenges claimant’s classification and succeeds to lowering claimant’s LWEC to 74% or lower, then claimant can appeal to the Full Board, as of right, for reconsideration. In essence, this gives claimants a second bite at the apple at achieving the safety net threshold.
Labor Market Attachment Defense Abolished in PPD Cases
Prior to April 10, 2017, at the time of a PPD classification, carriers and self-insured employers were able to raise the defense of “labor market attachment” and require claimants to produce evidence of job searches as a condition to receiving PPD benefits. However, Bill S2009C eliminates this burden upon claimants by amending Section 15(w) of the NY WCL to include language that claimants no longer have to prove that they are working or searching for work within their medically-assigned work restrictions. This is yet another win for the claimant’s side, and an unfortunate consequence of this new legislation to carriers and self-insured employers.
Temporary Partial Disability Cap
New York State Workers’ Compensation is notorious for turning the blind eye on claimants who are on temporary disability for protracted periods without reaching Maximum Medical Improvement (MMI) and thereby prolonging classification. Finally, Bill S2009C is the first step in the right direction in an effort to remedy this issue as it provides a further amendment to Section 15 of the NYWCL by capping claimants’ period of temporary disability at 130 weeks, or approximately 2.5 years.
Essentially, a claimant is required to have reached MMI within 130 weeks. If claimant’s period of temporary disability exceeds 130 weeks, then the carrier or self-insured employer receives a credit towards claimant’s permanency award for the excess period of time. This is certainly a positive change for carriers and self-insured employers as this amendment will push claimants towards reaching MMI and classification thereby starting the cap on the indemnity awards and reducing exposure.
However, there is an important exception afforded to claimants in this amendment. Specifically, a claimant who has reached, or exceeded, 130 weeks of temporary disability can apply to the Board to request an extended temporary disability period beyond 130 weeks. If approved by the Board, claimant can continue receiving temporary disability benefits beyond the 130-week cap and the carrier will be unable to take a credit for same.
Changes to the Disability Duration Guidelines
Although this is more of a preview of what is to come rather than a change in the law, Bill S2009C directed the Workers’ Compensation Board to issue new disability duration guidelines by the end of September of 2017. Essentially, the Board must completely revamp the current method for determining schedule loss of use (SLU) and LWEC, which has been universally seen as outdated. New York State is unique in that its current disability duration guidelines do not follow any nationwide standard, such as the American Medical Association guidelines followed by many other states. Hopefully the upcoming guidelines will provide some simplicity to the complicated Class and Severity ranking system that is currently used as a factor in determining LWEC.