Mitigating Workers’ Compensation Exposure for New York Employers
When the Workers’ Compensation Law was enacted in 1914, it was designed as a compromise between employers and employees. Employees would give up the right to sue an employer for a speedier, less formal process. Damages would be less than a personal injury lawsuit, but recovery would be easier. Unfortunately, in recent years, this bargain has fallen apart as costs on the workers’ compensation side have increased significantly.
The Cost to Employers
Since 2007, the maximum weekly compensation rate has increased from $400 to $1,145.43. To put this in perspective, a shoulder injury that resulted in a range of motion of 90 degrees would, absent other conditions, result in a 40% schedule loss of use, or 124.8 weeks of benefits. In 2007, that schedule loss of use would yield a maximum payment of $49,920. Now, that same injury would yield a maximum payment of $142,949.66. When you include the expense of lifetime medical coverage, the exposure on most workers’ compensation claims far exceeds whatever the claimant would receive in a hypothetical lawsuit.
The News Isn’t All Bad
The Medical Treatment Guidelines have successfully streamlined treatment for the vast majority of claims and thus held down medical costs by moving claimants along a treatment continuum. Similarly, the Workers’ Compensation Board’s prescription drug formulary has reduced prescription costs and the WCB is taking seriously the concerns inherent in prescription of narcotic pain medications. So, while costs on the indemnity side are increasing dramatically, they are not doing so on the medical side.
The WCB’s expedited hearing process has ensured that almost all disputed claims move from inception to decision on the merits within 90 days. This expedited timeline ensures a quick resolution, but also forces the parties to marshal evidence without delay.
Reducing Exposure for Employers
The best way to reduce exposure from workers’ compensation claims is by working with carrier and counsel from the start. There is no more cost-effective time to defeat a claim than at its inception, so a thorough investigation of a new claim is essential.
Questions to Ask During an Investigation
- Was it reported timely?
According to WCL section 18, a claimant has 30 days to report a claim. It should be noted that although many employers have a 24-hour notice policy for workplace accidents, this does not trump the statute. Still, a claim reported abnormally late may be cause for concern, and may give rise to doubts about its legitimacy.
- Is there reason to doubt that it happened as claimed?
Witnesses should be interviewed as soon as possible, with written statements taken, as witness memories will fade with time. Photographs of the site may be helpful, as might a walkthrough.
- Does the claimant have any pre-existing injuries?
When a claimant files a workers’ compensation claim, they need to provide the carrier and employer a medical release. Prior medical records need to be requested right away. Once a claim is indexed by the WCB, it will move rapidly. The old practice was to get a medical release at the first hearing, and investigate medicals at that time, but this is no longer sufficient. Any relevant medical records should be in the hands of the carrier and counsel at the time the claim is controverted.
- Is there a question about whether it was in the course and scope of employment?
Was the claimant on a lunch break? Were they on a personal errand? Were they injured in the parking lot before the workday began or after it ended? These could be defenses, and there is a very broad range of case law on the topic of injuries in the course and scope of employment.
- Is there some other issue that might render this claim non-compensable?
For instance, was the claimant not an employee? Were they on loan from another entity? Is this a claim where a jurisdiction other than New York would be more appropriate?
Timing is Important
Having counsel involved from the start of a case is advisable; the sooner your attorneys are involved, the better they will know the case and be prepared for trial.
The further a workers’ compensation claim goes along, the more the exposure is increased. Medical costs pile up, and every day a claimant stays out makes it more unlikely that they will ever return. A light duty program is an excellent way to keep the claimant at work; repeated studies have shown that employers who are able to offer light duty assignments get better outcomes from their claims. If a claimant cannot, or will not, return to work, pursuing the defense of attachment to the labor market can be very helpful in pushing the claim to a favorable outcome. A claimant has an obligation to look for work within his or her restrictions, and if the employer cannot accommodate their restrictions, the claimant has an obligation to look for work elsewhere. By aggressively pursuing this defense, ongoing indemnity benefits may be suspended, giving the employer and carrier leverage for a potential settlement.
Pursue Settlement at Every Opportunity
It is never too soon to settle a case; cases settled while the claim is still controverted will settle for a fraction of the value of a case that has been established with long-term awards. And while it may be tempting to avoid formalities, a workers’ compensation claim can only be resolved by WCL section 32; a side agreement with the claimant will not be recognized by the Workers’ Compensation Board.
In workers’ compensation, it often seems like the deck is stacked against the employer. While that may be true, there are still plenty of ways to mitigate your exposure; it just requires effort and taking advantage of the defenses available to you to do so.