In the recent case of Longley Jones Management Corp., WCB Case Number 60704882, the New York State Workers’ Compensation Board significantly revised the rules for calculating loss of wage-earning capacity. By determining that a uniform standard should apply in a permanent partial disability case, the Board implemented a new standard that will, in most cases, subject employers and insurance carriers to greater levels of exposure.
The case that previously set forth these rules, Buffalo Auto Recovery, WCB Case Number 80703905, had drawn a distinction between working and non-working claimants by noting that if a claimant was working at reduced earnings, their loss of wage earning capacity was solely determined by their reduced earnings. Thus, if a claimant was receiving reduced earnings that amounted to 50 percent of their pre-injury wages, they had a 50 percent loss of wage-earning capacity and were subject to the 300-week statutory cap consistent with that.
Buffalo Auto Recovery, however, was silent on the issue of what would happen if that claimant’s wages changed over time — a point the Board addressed in Longley Jones Management Corp. Here, the Board found that this led to unequal treatment when applied to claimants with identical disabilities. It noted that “two identical claimants with a presumed 50 percent loss of wage-earning capacity would be entitled to 300 weeks of benefits. If one of those claimants secures a light-duty job within their restrictions and is working at no loss of salary on the date of classification, he or she would be entitled to only 225 weeks of benefits. If that claimant becomes subsequently unemployed he or she would still only be entitled to 225 weeks of benefits while the other identical claimant received 300 weeks of benefits.”
The Board thus found that the question of benefit caps could not be determined solely by the calculation of reduced earnings, and instead, that the calculation of reduced earnings was merely one factor in determining the claimant’s overall loss of wage-earning capacity.
This decision is a counterintuitive one by the Board. The plain meaning of “loss of wage-earning capacity” would seem to demand a calculation as in Buffalo Auto Recovery; if a claimant has lost 50 percent of his pre-injury wages, he has a 50 percent loss of wage-earning capacity. Under this decision, a claimant with a permanent partial disability who might be entitled to 50 percent reduced earnings might now have a benefit cap consistent with a 75 percent permanent partial disability.
It is possible that in some limited cases, this may work to the carrier’s and employer’s benefit — for example, a well-educated claimant who has a job that simply does not pay well — but in most instances, the practical effect for carriers and employers is that benefit caps for working claimants are likely to increase, and so exposure on these files is likely to increase.
If you have questions about how this may impact your business, please contact: