Analysis of the Reform Bill
Major Provisions of the New York Employment, Safety and Security Act of 1996
(Chapter 635 of the Laws of 1996)
The New York Employment, Safety and Security Act of 1996 provides for balanced,
comprehensive reform of the state's antiquated and inadequate workers' compensation system.
When fully implemented this measure will save employers more than $1 billion per
year and reduce average premiums by over 25 percent.
In addition, through fundamental administrative changes, operations at the Workers'
Compensation Board will be streamlined, giving way to greater quality and efficiency in the
delivery of services to injured workers.
The New York Employment, Safety and Security Act:
- Repeals Dole v. Dow Precedent which permitted manufacturers which were deemed liable
for making injury-causing products to implead the employers of injured workers who successfully
sue them. This unlimited liability exposure, which was unique to New
York, was costing New York business over $300 million per year in added workers' comp
insurance. Repeal of Dole v. Dow restores the exclusive remedy standard to workers'
compensation except in the most severe cases.
- Institutes the "Grave Injury" Standard which permits third-party liability actions in very
limited circumstances such as death, amputation, loss of sight or hearing, and severe head trauma
and facial disfigurement.
- Expands the managed-care pilot program to include 50 percent of work force through the
year 2000. In addition, the two-MCO requirement on participating employers may now be waived
in areas where only one managed care network exists. The $15 safety
incentive fee charged to employers for the first medical appointment of each injury is also
eliminated and the time period before an injured worker can opt out of the program is increased
from 14 to 21 days (30 days if collectively bargained).
- Allows preferred provider organizations to offer workers' comp medical services if they
provide 5 providers in every medical specialty and a choice of three hospitals (exceptions granted
by the Workers' Compensation Board).
- Allows for Payment without Prejudice. Employers may enter into non-binding compensation
payment arrangements with injured workers prior to any liability determinations for up to one
year, without admission of liability.
- Establishes Safety Premium Credit to increase workplace safety by allowing companies to
take 5 percent of their investment in new technologies and apply it as a credit against workers'
comp premiums up to 15 percent of their total premium for three
years. Also, employers with premiums greater than $5,000/yr. and safety mods below 1.3 who
voluntarily establish certified safety and loss prevention programs may receive a 5 percent
premium credit for up to two years.
- Requires Safety Programs. Employers with payrolls of more than $800,000 whose
experience mods exceed 1.2 will be required to establish safety and loss prevention programs.
Failure to comply with the program will result in continuing and increasing
(.05 per year) experience mod sanctions.
- Imposes Tough, New Criminal Penalties for Workers' Comp Fraud by making such crimes
class E felonies punishable by fines and/or prison time. And makes the repeat offense, aggravated
insurance fraud, a class D felony.
- Establishes a Fraud Inspector General within the Workers' Compensation Board to bridge
the gap between the system and prosecutorial authorities. The Workers' Comp IG will have
subpoena power to investigate allegations of fraud -- with employees,
carriers, health providers, attorneys and employers. In addition, the State Insurance Department
and all workers' compensation insurance carriers will be required to form workers' comp fraud
- Penalizes Dilatory Tactics. Increases penalties from $150 to $300 on insurance companies
that use stall tactics and legal maneuvers without just cause to delay payments to injured workers.
Penalties will now be paid directly to claimants, instead of
to the state treasury.
- Limits dual recovery of UI and WC benefits. Ends collection of both workers' compensation
and unemployment benefits in excess of pre-injury wages and limits the total to 100 percent of
average pre-injury weekly wage.
- Expands Conciliation. Broadens the conciliation process' time jurisdiction for expected
benefit duration from 16 weeks to 52 weeks.
- Expands use of Pre-hearing Conferences by allowing conciliation attorneys, as well as
referees, to conduct pre-hearing conferences.
- Expands the use of Expedited Hearings where multiple claims arise from the same accident
or where the Chair deems necessary.
- Allows Stipulations and Waivers. Giving injured workers the option to make
Board-approved agreements with their employers after an injury to avoid costly and
time-consuming legal proceedings.
- Allows for Electronic Transfer of C-2s. Allows for the "transmittal" rather that "mailing" of
first injury reports to the Board.
- Reduces Section 110 Reporting Requirements. Changes requirement that employers file first
injury reports with the Board for accidents which result in loss of time beyond the shift or day of
injury to 1 day after the day of injury. Requires employers
to maintain records of any injury on site for 18 years.
- Permits medical charges to be less than the Board's Fee Schedule.
- Increases Time Threshold for Special Disability Fund. Increases the time threshold for
reimbursement from the "second injury" fund for accidents occurring on or after August 1, 1994,
from 104 weeks to 260 weeks. Also, the percentage applied to the
formula which determines the following year's reserve requirement in reduced from 175 percent to
- Expands Alternative Dispute Resolution. Establishes ADR procedures for non-union
employees, commissioners , referees and conciliators of the Board and high-ranking employees of
the State Insurance Fund who have filed workers' comp claims.
- Requires Annual Audit of NYCIRB by the State Insurance Department.
- Strengthens the State Insurance Fund by prohibiting raids on the fund and allowing secured
- Authorizes Special Studies on women and workers' compensation, occupational disease,
stress claims, fraud and open-rating of premiums.