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New York State
Workers' Compensation Board
OFFICE OF THE CHAIR
328 State Street  Schenectady, New York 12305
Governor Andrew M. Cuomo


Subject No. 046-548

Chair Announces Efforts to Promote
Permanency Classifications

Date: May 28, 2013

The Workers' Compensation Board (Board) is enacting process improvements to efficiently effectuate the classification of non-schedule permanent partial disabilities (PPD-NSL). The changes include new specialized hearing parts for handling classification of PPD-NSLs and stronger enforcement of existing requirements for medical providers to use the Doctor's Report of MMI/Permanent Impairment (Form C-4.3) as directed.

Background

An injured worker is entitled to PPD-NSL benefits if the workplace injury causes a permanent disability involving the back, neck, or other body part or physiological system that reduces the worker's earning capacity. PPD-NSL benefits are paid upon "classification," which is a determination that the injured worker has reached maximum medical improvement (MMI) and has a permanent partial disability.

Prior to 2007, PPD-NSL benefits were considered "lifetime" benefits. Approximately 8,700 injured workers were classified as having a PPD-NSL claim each year, which accounted for approximately 40% of the lost wage benefits paid annually. The average time from date of injury to MMI was 4.8 years.

The Workers' Compensation Reform Act of 2007 (2007 Reform) imposed duration caps on PPD-NSL benefits in claims that occurred after March 13, 2007 (Workers' Compensation Law (WCL) § 15(3)(w)). These caps were the 2007 Reform's central cost-savings measure and were expected to produce annual savings of approximately $1 billion.

Prior PPD Efforts

The Workers' Compensation Board has diligently enforced the duration caps since their enactment. In 2009, a board panel clarified that the duration caps took effect as a matter of law, even in the absence of new wage earning capacity guidelines, which were being developed at the time by the Workers' Compensation Reform Task Force at the NYS Department of Insurance: Matter of Buffalo Auto Recovery.

In 2011, the Board introduced new 2012 NYS Guidelines for Determining Permanent Impairment and Loss of Wage Earning Capacity (2012 Guidelines) and a classification process that took effect in January 2012. The measures included a revised Form C-4.3, which requires documentation of the medical impairment and specific functional abilities using the 2012 Guidelines, and a Vocational Data Form to document the claimant's education, work history, and other relevant non-medical factors. Providers are paid an enhanced fee for fully completing the impairment and functional capacity sections of the Form C-4.3. The Board also introduced a new classification process, specialized educational programs on the 2012 Guidelines, and new processes.

Data shows that despite these efforts, carriers have not achieved the level of PPD-NSL classifications that were expected. As of March 13, 2013, only 2,062 claims with accident dates from March 13, 2007 – March 12, 2008 have been classified, compared to 6,102 claims from 2002 at the same five year point. Private carriers are slowest – perhaps deterred by the requirement to deposit the present value of the PPD-NSL benefits into the Aggregate Trust Fund (ATF) if they cannot settle the claim within six months of classification. While increased Section 32 settlements prior to classification may account for some of the reduction in classifications, it is not sufficient to account for all of it. The average time from accident to classification has been increasing steadily and is now 6.4 years.

The classification process has been plagued by non-compliance and bad faith delays. Many providers fail to provide the required medical documentation using the Form C-4.3, even when specifically directed and despite the significant fee payable to the provider. In some cases, parties have delayed classification by falsely claiming that they are in settlement discussions or by disputing that the claimant has reached MMI many years after the injury. These claims are based on alleged new injuries or the possibility of surgery, when none exists. These tactics result in prolonged temporary disability and forestall the classification process and imposition of caps, thereby driving up the cost of workers' compensation for all employers and undermining the legislative bargain on the 2007 Reform.

New Program

This month, the Board will create specialized parts in each district to handle the classification of PPD-NSL claims. As has been the case, parties will be directed to obtain medical evidence on permanency in appropriate cases either by letter from the Board or by direction from a workers' compensation law judge (WCLJ) at a hearing. Treating providers must use the Form C-4.3 to document the claimant's medical status, including the permanent impairment and functional capacity, when directed by the Board, and must use the 2012 Guidelines to do so. Failure of either party to use the appropriate form and guidelines or produce the report in the directed timeframe may result in waiver of the ability to present medical evidence on the issue and/or the imposition of penalties.

The Board recently announced improvements to its Impartial Specialist program, which allow the parties to agree to use an Impartial Specialist and to select the specific physician. Parties are encouraged to utilize Impartial Specialists or other jointly selected authorized physicians to perform a single permanency evaluation rather than engaging competing medical experts.

Insurance carriers are reminded of their obligation to offer a Section 32 agreement to settle compensation and other benefits due to the claimant within six months of a PPD classification. Such an offer shall be made to the claimant's legal representative, if one exists. If not, the offer shall also include a statement of rights, obligations, and potential liabilities if the offer is accepted (WCL §32(a)).

MMI

According to the 2012 Permanent Impairment and Loss of Wage Earning Capacity Guidelines, "A finding of MMI is based on a medical judgment that (a) the claimant has recovered from the work injury to the greatest extent that is expected and (b) no further improvement in his/her condition is reasonably expected. The need for palliative or symptomatic treatment does not preclude a finding of MMI. In cases that do not involve surgery or fractures, MMI cannot be determined prior to 6 months from the date of injury or disablement, unless otherwise agreed to by the parties" (2012 Guidelines, 1.2).

Injured workers generally reach MMI within two years of the injury. Special circumstances may require additional time to reach MMI, but these circumstances must be documented. If a treating provider or independent medical examiner (IME) is asked to provide a permanency evaluation and believes that the injured worker has not yet reached MMI, the provider must document the treatment the claimant is receiving, specific improvements that are expected, and a timeframe by which the claimant is expected to reach MMI. As clearly stated in the regulatory definition, palliative or symptomatic treatment does not preclude an MMI finding.

The mere assertion of the possibility of future surgery is not a bar to MMI. The appropriateness of surgical intervention should be evaluated in light of applicable Medical Treatment Guidelines. A claimant must not only qualify for surgery but also have specific plans for surgery, including an active request for pre-authorization, if required. Judges may evaluate the credibility of the claimant or provider who asserts the possibility of future surgery, based on such factors as history of treatment, prior requests for surgery, etc. If MMI is deferred because of surgery, the claim will be followed to ensure that surgery occurs and the claim is reconsidered following post-surgical rehabilitation.

Similarly, the mere assertion of new consequential injuries at the time of classification does not preclude classification. The existence of prima facie medical evidence of a consequential injury will not, in and of itself, prevent the WCLJ from going forward with respect to MMI. The claimant's treating physician or consultant must still complete a Form C-4.3 and provide an opinion as to whether MMI has been reached. In order for the WCLJ to even consider the impact of a non-established but raised consequential site, the Form C-4.3 must indicate how the consequential injury impacts upon a determination of MMI.

Attorneys' Fees

In an effort to streamline and render consistent the Board's approach towards the awarding of attorneys' fees, the following guidelines will apply to the Special PPD Parts:

  1. Classification is a milestone moment in the life of a claim, and the fee represents the legal efforts made towards securing a just result for the claimant regarding permanency. The time spent in bringing this result about will be carefully reviewed by the WCLJ. The fee represents not only the present moment of classification, but entails an obligation for future representation on issues that may arise, such as third-party actions, medical care, and allegations of change in classification or entitlement to benefits;
  2. A Notice of Retainer and Appearance or Notice of Substitution must be in the file for the attorney or representative claiming a fee. No fee shall be approved or fixed for an attorney or representative who has failed to file and serve a Notice of Retainer and Appearance or Notice of Substitution as required by 12 NYCRR 300.17(a)&(b);
  3. A Form OC-400.1 fee application must be submitted in all instances where the fee request is over $450. The form must be filled out in its entirety, including the section for the date, description, and amount of time spent on each service. No fee will be approved or fixed unless the Form OC-400.1 is filed and completed in its entirety;
  4. In addition to reviewing the Form OC-400.1, the WCLJ may ask questions about the amount of time spent on the services rendered, and will consider the value of the particular legal services;
  5. The Form OC-400.1 should be submitted no later than the close of the hearing at which classification is made. In the event of a reserve decision, the Form OC-400.1 should be submitted prior to the event that serves to close the record;
  6. In summary, the WCLJ will consider the following in rendering a fee determination:
    1. Services rendered and the time spent rendering those services;
    2. The nature of the claim, and the severity of injury;
    3. The complexity of the case, considering such questions as: Was the claim controverted? Were re-openings necessary in order to ensure proper payments of disability, or prompt delivery of medical? Were there carrier RFA-2s?;
    4. Whether services fostered the PPD, or hindered it;
    5. Fee history: the amount of prior fees and were fees for prior services deferred?;
    6. Financial status of claimant;
    7. Did the attorney or representative engage in dilatory tactics or fail to comply in a timely manner with Board rules?;
    8. In no case shall the fee be based solely on the amount of the award.
  7. If the claimant is present at the hearing, the WCLJ will give the claimant an opportunity to comment on the fee request and will inquire as to whether the claimant is satisfied with the legal services rendered. The WCLJ will also inquire about the claimant's financial status, and carefully consider all the claimant's comments in determining a fee amount;
  8. If the claimant is not present, the WCLJ will not consider the fee request unless the attorney or representative submits proof of service that a copy of the Form OC-400.1 was served upon the claimant 10 days in advance of the awarding of the fee;
  9. In sum, the amount of the legal fee will be commensurate with the services rendered, and having due regard for the financial status of the claimant.

Conclusion

These improvements will help ensure that injured workers with permanent partial disabilities are timely and appropriately classified and that loss of wage earning capacity is determined consistently according to the Board's guidelines. Stakeholders are encouraged to review the 2012 Guidelines, FAQs, and the education programs covering the 2012 Guidelines and the Form C-4.3. If you have other questions, please send them to 2012Guidelines@wcb.ny.gov.

 

Robert E. Beloten
Chair