April 25, 2017
The 2017-2018 executive budget (Part NNN of Chapter 59, Laws of 2017), enacted effective April 10, 2017, includes meaningful workers' compensation reforms that generate cost savings for employers while providing better protections for injured workers. The reform legislation also requires updates to medical guidelines that reflect advances in modern medicine and requires the Board to adopt a prescription drug formulary by the end of the year. Below is an overview of the key pieces of the reform legislation.
Permanent Partial Disability (PPD) (non-schedule PPD)
The reforms amend Workers’ Compensation Law (WCL) § 15(3)(w) to provide a credit for periods of temporary disability that extend beyond 2.5 years (130 weeks) from the date of injury. Insurance carriers may receive a credit against the maximum benefits payable for permanent partial disability for any periods of temporary disability paid beyond the 2.5 years (130 weeks). This rule applies to all injuries with dates of accident or disability after April 9, 2017.
- Safety Valve: The statutory changes create a safety valve that extends the period of temporary disability beyond 2.5 years (130 weeks) when the Board makes a determination that the claimant has not yet reached maximum medical improvement on that date. The Board will offer further guidance regarding application of the safety valve in the near future. This rule applies to all injuries with dates of accident or disability on or after April 10, 2017.
- Post-PPD Labor Market Attachment: The statutory changes provide that after Board determination of permanent partial disability, a claimant who is entitled to benefits at the time of classification is no longer required to demonstrate ongoing labor market attachment. The statutory change does not affect the question of attachment during periods of temporary disability prior to classification. This rule takes effect immediately.
- Extreme Hardship Determination Threshold: The threshold for determining when a claimant with a permanent partial disability may apply to the Board for a redetermination due to extreme hardship has been lowered. Claimants who are found to have a loss of wage earning capacity (LWEC) of greater than 75% may now apply for such determination (formerly the threshold was greater than 80%). This rule takes effect immediately. The rule also applies to claimants whose claims were previously adjudicated with a LWEC greater than 75%. The Board will be issuing guidelines in the near future regarding applications for extreme hardship redeterminations.
- Mandatory Full Board Review: When a Board Panel reduces an LWEC finding to below the safety net threshold, and the LWEC had previously been determined by a workers’ compensation law judge (WCLJ) to exceed the threshold, any request for Full Board Review will be considered a request for Mandatory Full Board Review. This provision takes effect immediately.
Permanent Impairment Guidelines
New Permanent Impairment Guidelines will be adopted by the Chair of the Workers’ Compensation Board by January 1, 2018. The new guidelines will incorporate advances in medicine that result in better healing and outcomes for injured workers to use in evaluations and determinations for schedule loss of use awards. The Permanent Impairment Guidelines will be published after consultation with labor, business, medical providers, insurance carriers and self-insured employers. The statutory change requires the Chair to publish the Impairment Guidelines for public comment pursuant to the State Administrative Procedure Act on or before September 1, 2017. In the event the Chair does not adopt guidelines by January 1, 2018, the statutory change requires the Board to adopt interim regulations. New Impairment Guidelines will be effective on January 2, 2018.
The Board is required to adopt a comprehensive pharmacy prescription drug formulary by December 31, 2017. Under the formulary, drugs listed in the formulary may be prescribed for a causally-related condition. Any non-preferred drugs may only be prescribed when a variance has been granted. There will also be a method to review requests to add pharmaceuticals to the preferred list, which will be handled through the Medical Director’s Office (MDO). This change will be effective on December 31, 2017.
Mandatory 45-Day Hearing
Where there is medical evidence of a work-related disability, and claimant is not working, and not receiving benefits, and the claim is not controverted, the claimant may request a hearing, which shall occur within 45 days of the Board’s receipt of the RFA-1. The Board is in the process of revising the RFA-1 to accommodate this request and will issue the updated form and further guidance on the hearing process in the near future. This change is effective immediately.
- Penalties issued pursuant to WCL 25(2)(a) may now be imposed without a hearing. These penalties may be imposed against a carrier who has failed to pay or controvert a claim within the 18 days required by that subdivision. Such penalties are generally issued by the Board’s Monitoring Unit and they do not, in any way, affect the controverted claims (rocket docket) process.
- The Board may also establish performance standards, by regulation, and issue aggregate penalties against carriers or self-insured employers. This will enable the Monitoring Unit to more effectively regulate carrier behavior with respect to timely filing, payment, and controversy.
- These provisions take effect immediately.
First Responder Stress Claims
First responders (police officers and firefighters, EMTs, paramedics, certified emergency medical providers, emergency dispatchers, and those with similar titles) who encounter extraordinary stress in a work-related emergency who file a claim for mental injury will not be barred from a compensable work-related stress claim because the stress they encountered in dealing with an extraordinary work-related emergency is “no-greater-than” the stress encountered by other similarly situated first responders. For police and firefighters, WCL § 30 remains fully in effect, i.e., if a municipal entity provided workers compensation coverage, there is a full credit for any General Municipal Law (GML) §§ 207-a or 207-c benefits received. This provision takes effect immediately.
Workers’ Compensation Board Assessments
The Board may execute Assumption of workers’ compensation Liability Policies (ALPs) for any claims the Board is responsible to administer, including WCL §§ 15(8), 25-a, and Uninsured Employer Fund (UEF) claims. The change also allows inactive group self-insured trusts that are winding down but remain solvent to execute an ALP by borrowing from the self-insurance bond funds with a pledge to repay, prior to actually becoming insolvent.
Various Provisions Related to Insurance
- The Insurance Law has also been amended to extend the Compensation Insurance Rating Board (CIRB) tenure as a Rate Service Organization until 2028; to require a public actuary to release an annual report on the savings to the industry related to the 2017 Reforms in each of the next 10 years; to require carriers to refund current year savings due to the caps on injuries no later than December 31, 2018; and to require that workers’ compensation rate filings with 5% or greater increase over prior year’s loss costs would require a public hearing.
- The Board’s assessment fund balance allowance is reduced from up to 10% to no more than 5%.
Independent Medical Examination (IME) Study
The Board must conduct a study on IMEs in 2018. A new IME Advisory Committee will convene in 2019 to review the Board’s findings and make recommendations to improve the overall IME system.
Kenneth J. Munnelly