N.Y. Gov. Touts Success of Work Comp Reforms

New York Gov. David Paterson on Tuesday announced that the successful implementation of workers' compensation reforms will reduce insurance rates for the second year in a row.

The cost will decline again by about 5 percent for 2009, following a 20.5 percent decrease for 2008, for a total reduction of about 25 percent from the 2007 pre-reform rates. At the same time, maximum weekly benefits for workers, recently increased to $550 per week, will continue to rise each year until 2010 when they will be indexed at two-thirds of the average weekly wage.

"Last year's historic agreement set the framework for workers' compensation reform, but the savings are actually produced through the difficult work of developing and implementing the proposals. We will continue to work hard to cut costs for New York businesses and improve benefits for injured workers," said Gov. Paterson. "We have made progress. Two years ago, New York had one of the most expensive workers' compensation programs in the country. Now, we have one of the least expensive. We still need to do more and I am committed to ensuring that this reform program makes New York a better place to do business and a safe and secure place to work."

The lower rate can reportedly be credited to the successful implementation of reform legislation, which is being led by Gov. Paterson. More broadly, the reform efforts are designed to reduce costs to New York businesses while increasing weekly benefits and improving medical care for injured workers.

They include:

Increases in maximum weekly benefits from $400 to $500 in 2007, to $550 in 2008, $600 in 2009, and two-thirds of the statewide average weekly wage in 2010, where it will then be indexed annually;

A streamlined system for resolving contested claims and promptly delivering benefits to injured workers, while reducing administration costs;

Increased fraud and compliance actions, including stiffer penalties, to make sure everyone plays by the same rules;

Medical treatment guidelines that will improve care at a more effective cost;

A fair and even-handed set of guidelines for determining impairment and loss of wage earning capacity;

Fee schedules and supplier networks for pharmaceuticals, diagnostic services and medical equipment that contain medical costs.

The related reform proposals are being developed by the Workers' Compensation Board, the Department of Labor and the New York Insurance Department, which also approves the rates for workers' comp insurance. These rates take effect on Oct. 1 each year.

The 2009 rate decline is due to a new rate approval system that encourages competition among insurance companies to lower rates. The actual cost of paying claims for injured workers and the cost of a state assessment declined by 8.1 percent, according to data filed by the New York State Compensation Insurance Ratings Bureau (NYCIRB). Claims and assessments equal about 75 percent of the overall employer cost of workers' comp insurance.