By Hon. Susan V. Hamilton, Former Assistant Secretary and Deputy Commissioner, California Workers’ Compensation Appeals Board
For readers who may not be familiar with the Workers’ Compensation...
The U.S. Department of Labor has issued new data showing California's State Average Weekly Wage (SAWW) edged down 0.48 percent from $1,650 to $1,642 in the 12 months ending March 31, 2023. As a result...
CALIFORNIA COMPENSATION CASES
Vol. 88, No. 11 November 2023
A Report of En Banc and Significant Panel Decisions of the WCAB and Selected Court Opinions of Related Interest, With a Digest of WCAB Decisions...
By Hon. Susan V. Hamilton, Former Assistant Secretary and Deputy Commissioner, California Workers’ Compensation Appeals Board
Nearly two decades ago Senate Bill 899 was enacted and ushered in a...
LexisNexis has selected some recently issued noteworthy IMR decisions that illustrate the criteria that must be met to obtain authorization for a variety of different medical treatment modalities. LexisNexis...
By Ronald E. Weiss, Esq. and Ronald Balter, Esq.
2014 marks the 100th anniversary of the enactment of New York’s Workers’ (then Workmens’) Compensation Law. It is well known that the death of so many workers in the horrific Triangle Shirtwaist Factory fire moved New York’s legislature and Governor to enact the first in the nation workers’ compensation statute in 1911. The law represented a historic tradeoff between workers and employers, whereby workers were assured of prompt wage replacement and medical treatment coverage in connection with workplace injuries regardless of fault, and employers were shielded from lawsuits that may require them to pay large amounts for pain, suffering, wrongful deaths and other causes of action. The 1911 law was struck down by New York’s Court of Appeals which found that the statute violated New York’s constitutional protection of employer’s due process rights. It took an amendment to New York’s constitution before the workers’ compensation statute could be reenacted in 1914. Over its contentious 100-year history, the New York Workers’ Compensation Law and the workers’ compensation system have seen many dramatic changes, but they have assured compensation for millions of injured workers and their families while at the same time protecting New York employers from ruinous lawsuits.
Reforms Under the Business Relief Act
In 2013 Governor Cuomo pressed enactment of a number of reforms to the workers’ compensation system, ostensibly to cut costs for employers and carriers, without decreasing benefits to claimants. To do so the Governor successfully bypassed the usual process for legislative change to the law by including the proposed reforms in the New York State 2013/2014 Budget, which was due to be enacted by April 1, 2013. The reforms, enacted March 29, 2013, are contained in that part of the budget bill referred to as the Business Relief Act.
Closing of Fund for Reopened Cases
From a claims handling point of view, the most significant reform was the closing of the Fund for Reopened Cases under N.Y. Work. Comp. Law § 25-a to new claims on or after January 1, 2014. The Fund for Reopened Cases is unique to New York. Section 25-a provides that liability for administration of claims more than seven years from the date of injury and three years from the date of last payment of compensation shall be transferred to the Fund for Reopened Cases. The transfer has typically been accomplished by an application by the carrier to the Board on a qualifying case that was “truly closed.” The number of claims and thus the liability of the Reopened Case Fund is said to have skyrocketed especially with the advent of indemnity settlements only under N.Y. Work. Comp. Law § 32. Such settlements left the carrier liable for ongoing medical payments but after the requisite time periods have passed since last payment of indemnity positioned the case for transfer of that medical liability to the Reopened Case Fund under § 25-a. Recent studies had pegged the Reopened Case Fund as accounting for 25% of the New York’s highest in the nation 18.8% assessment on employers and carriers on top of a premium to support Special Funds and the Board. The Governor announced that the closure of the Reopened Case Fund would save employers and carriers three hundred million dollars in compensation costs; however, this savings does not account for the fact that employers and carriers will have to continue to pay for and administer claims for which the liability would have been shifted to the § 25-a Fund. It is said that future assessments to support the Special Funds will be relieved by this legislation as the Reopened Case Fund is said to be fully funded based on assessments already made. The Fund for Reopened Cases will remain in existence and retain liability on existing claims for many years to come. Because it was deemed no longer necessary to reserve funds for future assessments, the legislation directed that the State Insurance Fund pay over its reserves to New York State to relieve budget shortfalls for years 2013 through 2016.
There is at least a legal theory that the new legislation may not have effectively closed the Fund for Reopened Cases to new claims on or after January 1, 2014 because another part of the § 25-a statute provides that an award made after the requisite passage of time shall be against the Special Fund for Reopened Cases as a matter of law. It can be expected that this theory will be tested in litigation after January 1, 2014. However, based upon similar issues that remained after the closing of the Second Injury Fund in the 2007 Reform Law, it would seem likely that the courts will again overlook that provision of the law and uphold the intent of the Legislature to close the fund.
Assessments on Employers
Another component of the Business Relief Act was a change in the number and method for assessments on employers for supporting the Board and various funds to one unified assessment. The Governor’s office announced that the new assessment will provide five hundred million dollars in one time savings to employers. Self-insured employers will be assessed for the first time based upon their “premium equivalent” rather than their share of indemnity losses.
Defaulted Group Self-Insured Trusts
The Business Relief Act also legislated a presumed solution to the ongoing problem regarding covering the liabilities of underfunded and now defunct Group Self-Insured Trusts (GSITs). The Act authorized issuance of up to nine hundred billion dollars in bonds by the New York Dormitory Authority to cover the costs of the defaulted GSITs. The bonds are designed to enable the Board to purchase assumption of liability policies to cap and transfer unfunded GSIT liabilities. These assumption of liability policies reportedly facilitate voluntary collections from GSIT members. GSIT members remain jointly and severally liable for outstanding claims.
Minimum/Maximum Benefit Rates
The Business Relief Act also raised the minimum weekly compensation rate to the lesser of $150.00 or the claimant’s actual average weekly wage for injuries occurring on or after May 1, 2013, an increase from the $100.00 per week minimum enacted in 2007. Based on the 2007 indexing of the maximum compensation rate to the state average weekly wage, the maximum rate for accidents occurring on or after 7/1/2013 was raised to $803.21, more than double the maximum rate in 2007.
Aggregate Trust Fund
Not included in the Business Relief Act was a provision proposed by the Governor to eliminate mandatory payments by private carriers to the Aggregate Trust Fund (ATF) of the present value of permanency and death awards. The mandating of ATF payments for permanent partial disability awards under the 2007 Reform legislation imposed significant and anti-competitive costs on private carriers and the employers they insure and also substantially increased costs of some § 32 settlements. Its repeal has been sought by business ever since it was enacted. The New York State Assembly held up passage of the New York State Budget until that provision was eventually stripped out of the budget bill. As industry remains committed to repeal of mandatory ATF payments, labor remains committed to its continued inclusion in the WCL. Proposals for repeal of the ATF payments can be expected in the future.
Guidelines for management of chronic pain have yet to be promulgated by the Board, although the Board did implement a rule that up to 10 chiropractic or occupational or physical therapy visits per year are authorized for chronic pain with no variance required for such treatment. See Medical Treatment Guidelines. The Board has also made adjudication of a variance request from the Medical Treatment Guidelines the responsibility of the Medical Director of the Board as the default alternative, in an attempt to relieve the supposed backup of hearings on provider requests for variances. See WCB Subject Number 046-516 (March 1, 2013); WCB Subject Number 046-551 (June 21, 2013).
The biggest change in 2013 to claims handling by carriers, self-insured employers and third-party administrators has been the implementation of the electronic claims filing program (eClaims) by the Board. Many carriers implemented this program in the later part of 2013 and all workers’ compensation providers are expected to comply by April 2014. The program mandates that many of the forms filed by employers and carriers be filed electronically or be rejected by the Board with severe consequences for workers’ compensation claims. Forms are redesigned and renumbered to be in keeping with International Association of Industrial and Accident Board and Commission (IAIABC) standards. The Board’s reports come in two varieties (First Reports of Injury (FROI) or Second Reports of Injury (SROI)). Extensive consideration to the revised eClaims process is considered in Chapters 10 and 11 of this year’s New York Workers’ Compensation Handbook (LexisNexis).
In response to pressure from business to realize the promise of cost savings from the durational caps on PPD awards enacted in 2007, the Board launched in mid-2013 an initiative to clear the backlog of claims awaiting a permanent partial disability and fast track those classifications. Cases deemed ripe for PPD classifications are identified by Board examiners and calendared in special PPD hearing parts across the state. Judges presiding in those parts have directed parties to produce medical evidence regarding maximum medical improvement, degree of medical impairment under the Board Medical Treatment Guidelines and functional loss. The parties have been directed to produce such opinions over very short timeframes and, if not, be subject to penalties. The Board announced that generally claimants with injuries resulting in permanence are expected to have reached maximum medical improvement in two years’ time. The new PPD parts have seen a great deal of activity and some increase in classifications, often by stipulation of the parties, and have also contributed to more settlements. It remains to be seen whether this initiative will succeed in producing the stated goal of reducing costs by speeding classifications and the durational caps in post 3/13/07 injury cases.
Business Process Re-engineering
Perhaps the biggest impact in the workers’ compensation system in 2014 will result from the Business Process Re-engineering (BPR) project initiated by the Board in August 2013. The stated goal of BPR is to “significantly improve the experience of injured workers and employers in the New York workers’ compensation system.” BPR’s mandate is to “reimagine workers’ compensation in New York and build a new infrastructure that takes advantage of new technology, best practices, and 100 years of experience.” To assist in BPR, the Board has retained the business advisory firm Deloitte which has provided similar services to a number of other states’ workers’ compensation systems. BPR is a seven-month process involving outreach to workers’ compensation stakeholders focused particularly on processes and structure of the Workers’ Compensation Board, but it may also propose changes to the Workers’ Compensation Law and WCB regulations. As of this writing, we do not know what the BPR project is likely to produce. Its final report is due in April, 2014.
Closure of Nine Customer Service Centers
Just after BPR was initiated, the Board, without stakeholder input, directed closure of nine customer service centers which included WCLJ hearing parts primarily located in upstate communities outside of the major population centers. At the same time the Board announced that it would permit Judges to allow claimants, especially from such closed hearing sites, to appear at hearings via telephone, subject to the Law Judge discretion. The Workers’ Compensation Division of the New York State Bar Association’s Torts Insurance and Compensation Law Section, among others in the comp community, has expressed concerns about impairment of parties’ due process rights as a result of these changes and question whether this step will lead to a further erosion of the hearing process for workers’ compensation claims in New York.
The Governor is expected to highlight many of the above noted legislative and other developments in his State of the State message to be delivered in January 2014. As of this writing, it is not known what further proposals will be forthcoming. The business community is focusing on a number of areas for reform, including the standards and processes for making schedule loss of use awards on non-classifiable claims. No change was made in the statute in 2007 or in the Board’s Medical Guidelines for assessment of schedule loss awards. Meanwhile, the size of schedule awards has grown substantially since the 2007 reforms, particularly with the more than doubling of the maximum compensation rate.
This past year saw the Courts hand down a number of significant decisions affecting workers’ compensation in New York. A divided Appellate Division upheld the Board’s 2012 Medical Treatment Guidelines that had imposed so called evidence based standards for treatment and both authorized and proscribed many modalities of treatment for workers’ compensation injuries. The majority also held that the strict process for obtaining variance from these Guidelines afforded claimants adequate due process. This decision is currently on appeal to the Court of Appeals, New York’s highest court, but no decision has been rendered as of this writing [see Kigin v. State of New York Wrks Comp. Bd., 970 N.Y.S.2d 111 (3d Dept. 2013), mot. for lv. to app. granted 2013 N.Y. LEXIS 22937 (Oct. 22, 2013)].
In Sciame v. Airborne Express [101 A.D.3d 1419 (3d Dept. 2012), mot. for lv. to app. denied 20 N.Y.2d 860 (2013)], a follow up to the Court of Appeals 2012 decision in Schmitt v. Falls Dodge, the court held that the 2009 amendment requiring lump sum payments of schedule loss award balances at claimant’s request, did not override the proscription against claimants receiving combined benefits at greater than their maximum weekly rate. This means that claimants already receiving benefits on another compensation case may encounter a delay in receipt of their payouts of schedule loss awards or never see payout of the schedule award.
In the area of workers’ compensation fraud, the Court of Appeals ruled that a criminal plea to insurance fraud without a specific allocution regarding material representation would not be enough for the Workers’ Compensation Board to find that claimant committed fraud under N.Y. Work. Comp. Law § 114-a, leading to possible disqualification for compensation benefits. Facts establishing fraud must be produced by trial before the WCLJ [Howard v. Stature Elec., Inc., 20 N.Y.3d 522 (2013)].
In another ruling involving a collateral estoppel question, the high court held that a ruling of the Workers’ Compensation Board that claimant had no further disability was not conclusive evidence on this issue for purposes of a third-party action where the scope of what judges and juries must consider before making awards for damages is much more broad than that of the standards for determining disability in workers’ compensation claims [Auqui v. Seven-thirty One Limited Partnership, 2013 N.Y. Slip Op 08192, 2013 N.Y. LEXIS 3245 (Dec. 10, 2013)]. Such findings by the Board must be based on specific facts brought out at the Workers’ Compensation Board using via trial.
The Appellate Division clarified that a claim for workers’ compensation death benefits arising from an employee’s suicide due to the employee’s mental stress from the job will be judged by the same standard as mental stress claims not resulting in suicide, namely, whether the stress was significantly greater that to which similar workers in the employment were subjected [Veeder v. New York State Police, 102 A.D.3d 1072 (3d Dept. 2013)].
It is notable as the legislature and the Board attempt to effect partial closures of the Second Injury and Reopened Case Funds the largest number of cases decided by the courts in workers’ compensation field continued to be about liability of those funds.
Chapter Revisions to New York Workers’ Compensation Handbook (LexisNexis)
This year’s edition contains substantial revisions of nearly every chapter of the Handbook to account for major changes in the law and practice noted above and many more changes resulting from case law and administrative actions by the Workers’ Compensation Board.
Part II of this edition includes summaries and your authors’ commentaries on 87 decisions of the Appellate Division and Court of Appeals on workers’ compensation cases handed down over the past year. Parts III and IV contain up-to-date statutes and regulations pertaining to workers’ compensation in New York. The reference directory at the beginning of the handbook and the tables have also been updated.
As in prior years, this volume is brought to fruition by the efforts of many individuals who diligently furnished their time, knowledge and hard work to this project. In this regard, Mr. Weiss wishes to acknowledge and express his thanks for the effort and assistance given by the partners, associates, and staff of his firm, in particular his associate Rebecca Guerra and most especially his legal assistant Brenda McGraner.
Mr. Balter wishes to acknowledge the support from the attorneys and support staff at Caruso, Spillane, Leighton, Contrastano, Savino & Smollar, P.C. who allow him the ability to continue to work on and produce this book every year.
While the final product is the work of the authors, this handbook was built on original chapters to which other legal scholars recognized in the pages following this foreword contributed. The authors again wish to thank Thomas A. Robinson for his work identifying cases considered in Part II of this book and as always our editor, Robin E. Kobayashi for her knowledge and skills that patiently guided this edition to publication.
-Ronald E. Weiss, Esq. and Ronald Balter, Esq.
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