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WORKERS’ COMPENSATION LEGISLATION WILL REDUCE COSTS AND INCREASE BENEFITS

Governor Eliot Spitzer today signed landmark legislation which fundamentally reforms the state’s workers’ compensation system.

The legislation, which Governor Spitzer made a top priority in his new administration, will increase benefits for injured workers for the first time in more than a decade, while reducing employer costs by 10 to 15 percent.  New York State’s workers’ compensation 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,” said Governor Spitzer. “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.”

“In a sign of true leadership, the Governor has brought workers, employers and other branches of government together to find a fair solution to this pressing issue,” said Lieutenant Governor David A. Paterson. “New York’s working families and employers are pivotal to our state's success.  Empowering them to move forward during times of hardship will have a positive impact on our state’s future.”

Governor Spitzer also announced that he has asked the Acting Superintendent of Insurance Eric Dinallo to ensure that savings in the workers’ compensation system are translated into reductions in insurance premiums. 

As part of this process, the Superintendent, with assistance from Commissioner of Labor Patricia Smith and Chairwoman of the Workers’ Compensation Board Donna Ferrara, will:

• Collect and assess data relating to worker-related injuries and claims;
• Streamline the claims review process;
• Design new diagnostic and treatment protocols for medical professionals; and
• Develop training materials that will assist administrative law judges in making consistent case determinations.

Kenneth Adams, President of the Business Council, said:  “This reform package is welcome news for employers and workers alike throughout New York State. Employers will see their costs come down while injured workers will get better benefits. In the end, it's a vital step toward making New York a more attractive place to launch or grow a business.”

Scott Stevens, President of Dimension Fabricators, a Schenectady based manufacturer of steel products, said:  “As a New York manufacturer, we’ve had workers’ compensation as one of our great burdens for years. Even with a good safety record, this cost is right behind health insurance in our expense column.  These reforms will reduce one of New York’s historically high business costs, helping us compete with our rivals in other states and countries.”
 
Denis Hughes, President of the New York State AFL-CIO, said: “This is the first time comprehensive change within the workers' compensation system has taken place.  This is truly an historic day.  Injured workers in this state, the business community and all New Yorkers are winners today.”
 
Kevin Hicks, President of the Empire State Regional Council of Carpenters, said:  “This legislation guarantees that injured workers will never again have to go fifteen years without a benefit increase.  Labor and business owe Governor Spitzer and our legislative leaders a debt of gratitude for working so hard to come to this fair and reasonable settlement on such a difficult issue.”

Assembly Speaker Sheldon Silver said:  “This legislation is about working families and the moral obligation we share to ensure their security when their bread winners are injured while on the job. It’s also about business and our obligation to reduce the cost of doing business --particularly in upstate New York -- and the responsibility we share to level the playing field for employers throughout this state.”

Senate Majority Leader Joseph Bruno said:  “The workers’ compensation reform law is a tremendous victory for workers who will receive increased benefits, and for businesses that will see a significant reduction in premiums.  Many of the reforms in this law result from bills passed by the Senate over the past decade, as well as initiatives discussed at workers’ compensation roundtables held by Senator George Maziarz.  I congratulate Senator Maziarz and the representatives of business and labor for working together to deliver a result that will strengthen businesses and protect employees.”

Senate Democratic Leader Malcolm A. Smith said: “This agreement will help protect injured workers and their families, while also addressing one of the most significant problems facing New York’s business community -- high workers’ compensation premiums.  After years of gridlock, it is a testament to the Governor’s leadership and commitment that he could bring both sides to the table and render an agreement so quickly.”

Assembly Minority Leader James Tedisco said:  “For far too long New York’s workers’ compensation laws were a great impediment to economic growth and job creation. Today’s bill signing represents a tremendous breakthrough and sends an important signal to the business and labor community both here and around the country that the business climate in New York, especially Upstate New York, is getting warmer.  There is much more to do but this was a big one.”

Key elements of the comprehensive reform package, passed with unanimous support of both houses of the legislature, are as follows:

● 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;

● The minimum weekly benefit will be increased from $40 to $100;

● Cost savings worth hundreds of millions of dollars will be achieved by setting maximum number of years that a small population of claimants -- those classified as being permanently partially disabled -- can receive cash benefits. Those maximums will be based on the claimants’ degree of disability. Medical services will continue, and a safety net will be established to help these workers return to gainful employment and to intervene in cases of extreme hardship;

● Innovative programs are being established to get workers prompt medical treatment and to help them return to work;

● Strong anti-fraud measures will be in place, including the ability to stop work on a job site where a company has failed to purchase workers’ compensation insurance for its workers, higher criminal penalties for violators, and debarment provisions;

● An expensive fund known as the Special Disability Fund, which is now financed by assessments passed through to employers, will be closed to new claims. The fund was initially set up to help injured workers, but is now instead used by some insurance carriers as a costly loophole by which they transfer claim costs to the entire industry.  By closing the fund, the new law eliminates this practice; and

● The Superintendent of Insurance will make a recommendation to the State Legislature in September 2007 as to the rate setting process for workers’ compensation.