New York’s Evidence-Based Treatment & Settlement Guidelines: Part I. Disability Duration Guidelines

New York’s Evidence-Based Treatment & Settlement Guidelines: Part I. Disability Duration Guidelines

By Theodore Ronca, Esq., Aquebogue, NY,
and Rebecca A. Shafer, Esq., Hartford, CT

There are two sets of workers compensation guidelines set to be used in NY. We will discuss the two sets of guidelines, their impact on workers compensation payments and litigation. (Editor’s Note: Part I is set forth below. To read Part II of this article, click here.)

In September 2010, proposed guidelines were published for the evaluation of permanent partial disability (often referred to as PPD), not subject to “schedule” loss evaluation, in New York worker’s compensation claims (Workers’ Compensation Law, Sect 15(3)(w)). Essentially, these guidelines are intended to cover settlement awards principally related to back claims. Such claims have, for more than half a century, dominated the hearings, trials and appeals in the New York workers’ compensation system. These are thought to account for 60-70% of attorney fees.

The proposed guidelines do not yet have a date set for their becoming an active part of the workers’ compensation system. The Workers’ Compensation Board has elicited comments on the proposed guidelines after which the comments will be considered and further modifications will be made. However, it is anticipated that the major structure of the guidelines will remain. The disability duration guidelines can be found at: 1085.8KB

The Disability Duration Guidelines are to be comprised of three inter-related segments: (a) Medical Impairment Guidelines; (b) Residual Functional Abilities/Losses Guidelines; and (c) Loss of Wage-Earning Capacity Guidelines. The Advisory Committee and Task Force were able to reach a consensus regarding Guidelines for the first two segments concerning medical impairment and functional capacity. Several alternatives regarding Guidelines for loss of wage-earning capacity were considered over many months, but the Advisory Committee was unable to achieve consensus.

The guidelines make no major change in the Workers’ Compensation Law sections dealing with non-schedule permanent partial disability (PPD); they merely reaffirm the process for evaluation that has been an integral part of the statute since 1914, but was allowed to lapse after major changes in Board structure in 1947.

After 1947, the Board saw a post-war expansion as well as a new generation of claims personnel. The adjudication of PPD came to dominate the field of workers’ compensation in NY due to the introduction of lump-sum settlements, not previously part of the pre-war comp system. These settlements accounted for the bulk of legal fees and changed the practice of comp law in NY.

The weekly rate awarded to PPD claims, which would determine the amount of the settlement, was supposed to be measured by loss of earning capacity. This would vary, even with identical injury, from worker to worker, depending on their age, education and availability of suitable work in other jobs. But those evaluations proved to be difficult and taxed the resources and claims experience of the Board, the claims units and the attorneys. This led to a non-statutory method of approximating disability by use of “minimal, mild, moderate or marked” disability.

Especially hard hit were permanent total disability claims, formerly evaluated using the standards set in Jordan v. Decorative Co., 230 N.Y. 522, 130 N.E. 643 (1921), a Cardozo decision which incorporated the British “odd lot doctrine” into New York comp law. Since permanent total disability claims could not be lump-summed few attorneys pursued them and they fell to as low as 60 per year by the 1980s, although over 10,000 claims per year were being held to be PPD.

Eventually, the system of evaluating PPD led to overuse of “mild, moderate or marked” disability, with settlements most frequently at 50% “disability”, which was taken to mean 50% of maximum partial rate. Although that method moved claims through more quickly, it led to far too many cases of under-compensation and over-compensation, which inevitably results from using averages to apply to all claims.

The present proposed guidelines return to the statutory scheme which requires a fact based measurement of an individual’s loss of earning capacity.

Evaluation under Proposed Guidelines

The proposed scheme requires that the Board, after gathering relevant evidence, evaluate a permanent disability in a three step procedure. First, what is the permanent medical impairment, taken after maximum medical improvement has occurred. Second, what residual functional capacities are present. Third, what is the wage-earning capacity of the worker that remains at this point.

The guidelines have detailed methods of measuring the first two but, as yet, nothing on measuring wage earning capacity. This was the same problem which plagued the old system.

The detailed standards for medical impairment and residual functional capacity in the proposed guidelines will almost certainly result in more detailed reports and far more testimony. The evaluations will be quite technical, inviting copious testimony.

While the proposed system will lead to as much litigation as previously on issues of medical improvement and functional capacities, there will be the lurking problem of wage loss. The guidelines also make reference to allowing claims to be resolved by stipulation of the parties to a permanent rate, which leaves open the possibility of the attorneys resorting to the decades old system which settles at an equilibrium point of 50% loss, an average which the system as a whole can accommodate but which is factually correct for only a few per cent of all claims.

The New Role of the Employer

The role of the employer in New York comp claims has been almost entirely passive. Employers rarely attend hearings, unless called as witnesses in contested claims. Yet the employer is the best source of information regarding job requirements, prevailing wages in the community for jobs related to the worker’s skills, and availability of such work. This is the very information needed to activate the statutory PPD scheme but until now has been lacking.

The Board has realized this and will welcome comments on measuring wage earning capacity, according to many Board sources.

Persons at the Board are coming to realize that a far greater role by the employer as an expert witness on earning capacity will solve the problem of completing the final step in the evaluation of PPD.

Employers, however, do not see themselves as expert witnesses and need educational material on the new role they can play. The old method of “50% disability” led to disastrous consequences for many valued employees and a windfall for others. Employers can be expected to welcome accurate measurements based on individual situations.

New Roles for the Employer under Proposed Guidelines

Under old comp procedure, NY employer’s role was passive. Under the proposed guidelines, the employer’s role will be to provide information necessary to calculate future wage loss, since the employer is the best single source and witness to the particular details of the characteristics of the employee-claimant.

On any claim where lost time exceeds a few weeks, the employer should begin by assembling, and forwarding to the Board, the carrier and the employee, a detailed description of the job, its duties, and the physical requirements. Then, if the employee does not return to work, the employer should assemble data about prevailing wages for jobs which are related to the employee’s job but have less physical requirements. The employer need not employ people in such jobs or even make an offer of employment. The employer in this case serves as a source of information about job titles and wages.

Each employer should begin to build a database for their company that includes each job description, wages, duties and physical requirements. This will promote consistency by the employer in the event of future claims by additional employees in the same job position. The employer should also maintain the data on related jobs that have less demanding physical requirements.

The sooner the information is sent to all parties, the sooner a reasonable resolution can be attempted.

The information provided may disclose that although an employee may not be able to return to former activities it is still possible to find work with 85% or more of former wages. This will result in PPD awards less than one third of what might be expected under a “settlement” for 50% loss of earning capacity when there is no hard evidence of loss of capacity.

If the employer is not already doing so, it is recommended the employer have a proactive return to work program. The employer can develop and have available several modified duty jobs descriptions to fit almost any level of disability. The employer can advise the treating physician of the temporary jobs they can offer during recovery. If employers have no modified jobs on their worksite, they should consider alternative employment or home-based employment. These options offer the employee the same wages as prior to the injury. This is important because a lower paying job could mean a larger wage differential and thus a higher final settlement. The employer should pay the highest wage that is economically feasible for that position.

Pain and its Evaluation

Pain has always been a problem in evaluation of New York comp claims. It will remain so even under the proposed guidelines. It is obvious that pain restricts most activity. It is distracting. It may require medications that effect judgment and attention. Pain has always been a factor in obtaining greater payments of compensation.

The proposed guidelines contain a method for quantifying pain by asking the worker to answer 15 questions about pain they experience and its consequences. It can be anticipated that plaintiff attorneys will instruct employees on how to respond to pain evaluations. Pain evaluations will become a major part of the overall evaluation and litigation.

There is a significant possibility that “pain” as a means of avoiding unfavorable wage loss calculations will become dominant at some hearing points. The fact that the system is not homogeneous state-wide has caused reforms to succeed in many places and fail dramatically in others: reforms are generally accepted more readily in areas with low population density and less so in high population density urban areas.

Proactive defense for “pain” and PPD under NY work comp guidelines

Monetary awards for PPD are not linear under the new law. They are based on “wage loss” and “caps”, i.e., the higher the percentage of wage loss, the more lifetime weeks of PPD are awarded. The dollar total rises, roughly, as the square of the wage loss.

The most effective method to increase wage loss is to allege “pain”. Currently, the best ways to measure “pain” is to use new methods of ergonometrics to establish a baseline early in the claim. [Ergonometrics is the technology concerned with design, manufacturing and arrangement of products, tools and environments to be safe, healthy and comfortable for human beings]. In the weeks following an injury, many people are more forthright in their complaints than they are likely to be a year later when they are close to a settlement.

An ergonometric test, taken early without significant complaints of pain, establishes a baseline. If the same ergonometric results are present later, when there are complaints of pain, it may be concluded that the “pain” is causing no more restriction than it did a year earlier. This will substantially lower the caps on a PPD settlement.

Early testing is possible, but only with a proactive approach. Delaying initial testing until a few comp hearings have occurred will greatly diminish the effectiveness of a test.

Early exams can properly be scheduled outside the normal comp procedures if they are for OSHA or ADA compliance. However, those exams can be done ONLY by the employer, as a carrier or TPA has no role in these laws. The records from those exams can be entered into the comp record only by proper subpoenas and releases, since they are not exams under Sect 137 of the WCL.

Settlement and Compromise

Traditionally, the law favors settlement over formal procedures. However, when compensation laws were first drafted compensation boards were intended to be watchdogs, not merely impartial adjudicators. The dual role has proven to be difficult but boards drift to favoring private settlement when well-meaning statutory schemes develop a reach which exceeds their grasp.

Whatever else the proposed guidelines contain, they retain the emergency throttle which can cut runaway litigation by subtly, and not so subtly, encouraging the parties to come to their own agreements. The economics of law practices are such that swift private settlement, but only after a moderately long period of waiting, tends to produce the highest average hourly return.

Expected Outcomes for the PPD guidelines

If the proposed guidelines are formally enacted, which seems nearly certain to occur within one year from the present, certain changes will appear.

First, a period of confusion is inevitable as decades old patterns are disrupted. This period need not be too long since the practice of comp law is highly repetitious and new patterns are quickly established.

Second, there will be a greater reliance on factual evaluation of individual situations that cannot be settled by agreement. The old system of legal fictions about “degree of disability” will be discarded.

Third, the role of the employer will become critical, although it will appear only at the end of the evaluation process.

Fourth, appeals of decisions will change, if they are to succeed. Generalized objections and emotional arguments will be replaced by sharply focused analysis of statute and case law.

Fifth, information gathering regarding jobs and wages will assume unprecedented importance in evaluation.

Sixth, “pain” can be expected to be a major factor overall.

Insurers and Employers Should Get Prepared

Preparation of comp claims in NY acquired a long period of delay under old procedures. Now, earlier employer and carrier preparation will be important. It was believed by carriers that preparation involved more of a role by investigators than employers, an expensive outlook which failed to make use of relevant and vital information already in the custody of the employer.

With the new PPD guidelines, maximum use of the employer, as expert and source of information and leads, will spell success for the proactive employer paired with a willing and capable carrier.

Most employers will have to modify practices minimally. They routinely collect and store most on the information necessary to achieve significantly better results. However, both employer and carrier must accept that old methods will no longer work. The effort need not be greater, just different. The emphasis must be focused on more details regarding job requirements and prevailing wages, not the old measurements of “mild, moderate, marked disability”, which were, at best, informal and undefined in the law.

Employers Can Minimize Work Comp Claims

There are several step New York employers, and employers everywhere, can take to control the cost of work comp claims. The following are some suggestions about what you can do prior to the injury occurring that will have an impact on the outcome of the work comp claim.

1. Provide each new hire with an employee accident brochure outlining what the employee should do in case of an accidental injury.

2. Have a written transitional duty policy. Publish the policy.

3. Provide each supervisor within the company a written guide on how they are to report and be involved in work comp claims.

4. Post the injury procedure policy where all employees will see it.

5. Have a strong safety program and tie the manager's performance evaluation, raise, bonus or promotion to his or her safety record.

6. Award each month (or quarter) the department with the best safety record with recognition and prizes to the employees.

7. Have a state certified Preferred Provider Organization in place through your insurance company.

8. Prevent fraud by letting all employees know that work comp fraud takes money away from their raises and bonuses.

9. Put up posters reminding employee that work comp fraud is a crime and will be fully prosecuted.

10. Use an anonymous, toll-free tip line.

11. Post all the state required notices in a place convenient for all employees to see including work comp laws, OSHA posters and anything else required by the state.

© Copyright 2010 Amaxx Risk Solutions, Inc. Reprinted with permission.