New York, NY – February 21, 2017 – The New York Workers’ Compensation Alliance has released a new paper analyzing new reports from the insurer-based New York Compensation Insurance Rating Board, the United States Department of Labor, and the National Academy of Social Insurance. The extensive data in this trio of reports clearly establishes that employer costs for workers’ compensation and benefits for injured workers are at historic lows, while insurer profits are skyrocketing. Continue reading “WORKERS’ COMP EMPLOYER COSTS, WORKER BENEFITS AT HISTORIC LOWS – INSURER PROFITS RISING”
For the past several years, business and insurance groups have sought to persuade the Workers’ Compensation Board to cut benefits for injuries that result in permanent loss or loss of use of a limb. These are known as “schedule loss awards,” and apply in cases such as limb amputation, fracture, surgery, loss of vision and hearing, and other permanent damage. Continue reading “WCA RELEASES NEW PAPER ON SCHEDULE LOSS COSTS 1992 – 2016”
Business and insurance groups including the Business Council of New York State have recently advocated for drastic reductions in workers’ compensation awards for “schedule loss of use.” These awards are payable to workers who suffer from permanent loss or loss of use of limbs, vision, or hearing. To justify their campaign, business and insurance interests contend that these awards are now “skyrocketing” as a result of the 2007 legislative reforms.
To the contrary, however, a review of cost trends in schedule loss cases from 1992 through 2015 shows that costs related to these cases were flat from 1992 to 2007. There were moderate increases from 2007 through 2012 that affected an ever-smaller portion of the workforce. Since 2012, however, costs in schedule loss cases have again been essentially flat. The data showing that there has been virtually no change in schedule loss costs for the past four years casts serious doubt on the validity of industry claims.
The WCA has just released a new paper analyzing the data and proving that the schedule loss of use costs have increased less than one-half of one percent in the past four years. You can read the paper here.
The WCA opposes A10160/S6978, which would extend the term of the New York Compensation Insurance Rating Board (CIRB) as the rate service organization for setting workers’ compensation insurance rates for an additional five-year period.
The CIRB is an entity authorized by State law to propose Workers Compensation rates for private carriers. CIRB is trusteed and funded by private carriers. The 2007 amendments to the Workers’ Compensation Law included provisions that were intended to sunset CIRB’s authorization by 2012. In the course of the 2007 reform process it became clear that CIRB was unable to provide policymakers with accurate and reliable data. The Insurance Department rejected CIRB’s rate application in 2006 due to a lack of reliability, and reduced CIRB’s application in 2011 because it could not account for the disparity in CIRB’s claim experience as compared to that of the State Insurance Fund.
Based on dissatisfaction with CIRB’s performance, the Legislature and Governor public members were added to its Board in 2007 as an interim step to transferring its data collection and rate-making functions to the Insurance Department, now the Department of Financial Services (DFS).
In 2007 and 2008, CIRB recommended reductions in workers’ compensation insurance rates of almost 25%. These recommendations were made based on factors including (1) the imposition of time limitations on permanent partial disability benefits (PPD caps); (2) projected increases in the maximum weekly benefit rate; (3) the creation of a mandatory deposit of PPD benefits into the Aggregate Trust Fund (ATF) for private insurers; (4) the elimination of the Second Injury Fund; and (5) other anticipated administrative and regulatory forms related to insurer diagnostic test and pharmacy networks and Medical Treatment Guidelines (MTG).
From 2009 through 2011, CIRB retracted its recommendations, requesting increases in workers’ compensation insurance rates of more than 22%. It has now submitted an additional rate increase application of 11.5%. In essence, CIRB now contends that the impact of the 2007 reforms was not to decrease costs by 25%, but to increase them by 9.5%.
CIRB accounts for this reversal by claiming that the 2007 reforms have proceeded at a slower pace than it anticipated. This claim is unjustified. CIRB and all actors were aware in 2007 that the PPD caps would not result in significant benefit termination until 2015, and the impact of the caps on settlements is already being realized. CIRB was also aware in 2007 that the maximum weekly benefit rate would double in the five-year period after the reform legislation was enacted. Department of Labor data has demonstrated that increases in the maximum weekly benefit rate after July 1, 2008 have had limited impact on workers’ compensation costs, as two-thirds of injured workers do not earn sufficient wages to obtain a benefits in excess of $550 per week. Therefore, neither the PPD caps nor the increase in the maximum benefit rate present factors that were unaccounted-for in the 2007 and 2008 premium reductions, and cannot be responsible for the subsequent requests for increases in excess of 34%.
The use of diagnostic and pharmacy networks was fully and quickly achieved, and while the implementation of Medical Treatment Guidelines did not occur until the end of 2010, data has demonstrated that the use of the MTG has increased, not decreased insurer costs. Thus, the delay in implementing the MTG did not result in an increase in costs.
There is therefore no valid basis in support of CIRB’s applications for increases in 2009, 2010, 2011 or 2012. The state of the system in those years is unchanged from 2007 and 2008, when CIRB recommended substantial reductions.
It remains the case that CIRB is unable or unwilling to provide policymakers with accurate and reliable data upon which proper statutory, regulatory, or administrative decisions can be made. It is the position of the WCA that CIRB’s authority to function as the exclusive rate service organization should not be extended for an additional five year period, and that DFS should assume data collection and rate-making functions in the workers’ compensation system. A better course would be to extend CIRB authority for for one year and to hold hearings on a better entity and process to propose comp rates.
On June, 25, 2012, the WCA submitted oral and written testimony to the New York State Department of Financial Services opposing CIRB’s request for an 11.5% hike in employer’s workers’ compensation insurance premiums. A copy of that testimony can be found here.
The New York Workers’ Compensation Alliance, a coalition of injured workers and those committed to protecting the rights of injured workers, hailed a decision by the New York State Department of Financial Services to reject a request for an 11.5 percent increase in workers’ compensation premiums.
NYWCA called for full transparency of insurance carrier costs, claiming that the unverified numbers submitted by insurers are unnecessarily driving up costs for New York State businesses.
The 11.5 increase requested by insurers followed premium increases of nearly 23 percent between 2009 and 2011, and would have imposed an estimated $500 million in additional premium costs on employers in New York State. The 2009 – 2011 increases, which WCA feels were unjustified, nearly eclipsed premium reductions of 25 percent that were achieved through workers’ compensation reforms enacted in 2007.
For the past two years, NYWCA has testified before DFS against rate increases, and this year it was joined by a host of businesses testifying against the increase request, which was based on unverified cost increases submitted by the very insurance carriers that stand to benefit from the overall rate increases.
Rate increase requests are submitted by the New York Compensation Insurance Rating Board, a statutory rate service organization that until 2007 was comprised solely of private insurers. The cost increases reported by insurance carriers as the basis for rate increases are not independently verified. Nor are the numbers broken down to reveal insurance company profits, expenses and costs.
“The NYWCA represents injured workers and we strongly object to unnecessary premium increases whose only beneficiary is private insurance companies,” said Robert Grey, chair of NYWCA. “The costs for the increases fall unfairly on businesses and the blame falls unfairly on injured workers.”
Grey said that the DFS decision and the vocal opposition by employers to the unnecessary increases is a tremendous victory for injured workers. “When rates go up it becomes extraordinarily difficult to advance good legislation that benefits workers’ health. It is critical for businesses to know that claim costs are not the primary driver of increased workers’ compensation costs – insurer profits are.”
Grey said that stronger supervision and regulation of insurers is needed. Ironically, the only part of the 2007 workers’ compensation reforms yet to be implemented is a provision intended to replace NYCIRB with a transparent, accountable entity to set workers’ compensation insurance rates.
“When a group of unregulated insurers is permitted to propose rates and the state remains unwilling or unable to call for data and accountability, employers and injured workers suffer,” Grey said.
On February 22, 2012, an arm of Public Employers Risk Management Association (PERMA) released a “report” claiming that workers’ compensation assessments are a “tax” that is dramatically increases employer costs. This “report” was filled with misleading statistics and misinformation, to which the WCA responded on March 16, 2012.
On September 10, 2012, PERMA released a “new” report that simply repackages its prior claims, perpetuating the same factual and legal inaccuracies.
The WCA believes that sound public policy must be based on accurate information, and not mischaracterizations of the facts and misstatements of the law. As a result, the WCA has again responded to PERMA’s release and set the record straight.
The key points of the WCA report are:
– Assessments are not a “tax.” To the contrary, most assessments are a reinsurance system that benefits employers and insurance carriers. According to PERMA’s own report, nearly 80% of assessments relate to the Special Funds, which reimburse money to employers and carriers. Almost 98% of the money employers and carriers pay in assessments related to the Special Funds is returned to those same employers and carriers.
The “Public Policy Institute of New York State, Inc.” (PPI), an arm of the Business Council, recently released a report titled “Revisiting the Reforms.” The report contends, in essence, that workers’ compensation is a high cost for employers and that the 2007 reforms increased those costs. The report refuses to acknowledge the role of the Business Council in developing the 2007 legislation, fails to mention to gross inadequacy of benefits for the fifteen preceding years, and mischaracterizes the cost of workers’ compensation.
The PPI report is not based on relevant facts or data, and is indeed refuted by information available from CIRB and other sources. Time after time, the PPI report selectively extracts a specific fact, strips it of all relevant context, and advocates for radical policy changes that would dismantle a primary resource for New York State workers. When all of the available data is considered in proper context, however, it becomes apparent that employer workers’ compensation costs were declining prior to the 2007 reforms, and have subsequently continued to decline. In short, the PPI report is a transparent attempt to paint a picture of a crisis that does not actually exist. What is required instead is greater transparency and accountability on the part of insurers and their representatives, so that proper public policy decisions can be made.
Accordingly the WCA has issued a response, which available here.
New York, NY, 06/04/2013 — The New York Workers’ Compensation Alliance today released a letter to the New York State Workers’ Compensation Board expressing concern over the Board’s plan to expedite the classification of permanent partial disability (PPD) cases, ultimately terminating benefits for thousands of permanently disabled workers.
The WCA stated that the agency’s plan represents a troubling departure from its proper role as an impartial adjudicator. “It isn’t the Board’s job to decide what claims the parties should be making,” said WCA Chair Robert Grey. “It’s the Board’s job to make fair and impartial decisions about the claims the parties bring before it.”
WCA Board Member Brian Mittman added that the Board’s plan appears to be designed for the benefit of insurance companies. “The carriers could have asked for classification any time in the last six years,” said Mittman. “Now the Board is stepping in to do their work for them. That’s simply unfair to injured workers.”
At issue are permanency classifications, which as a result of the 2007 reforms work for the benefit of insurers by imposing time limits for payment of benefits. As Mittman observed, insurers have chosen not to pursue this aspect of the reforms, and the Board has now taken on the task for them.
The WCA expressed particular concern about the threatening nature of the plan. “They have made it clear that they will prevent the parties from offering evidence, ignore the fact that someone needs surgery, and sanction attorneys if anything ‘hinders’ classification,” said Western New York WCA Board Member Greg Connors. “This is a rush to judgment, with no concern for whether that judgment is fair.”
The WCA contends that the Board does not have, nor should it have, any interest whatsoever in the outcome of any individual case, or of cases generally. “We are very concerned about the underlying principle here,” said Grey. “This plan puts the Board clearly on the side of the insurance industry, at the expense of permanently disabled workers. If anything, it is the Board’s obligation under the statute and nearly a century of case law to protect injured workers.”
The WCA letter can be found here.