Executive Summary of S768’s Impact on New York Workers’ Compensation Claims
Why It’s Important:
Passed by the New York Legislature in June, this law defines temporary disability as inability to perform pre-injury duties or light duty at the same job – versus ability to do any light duty work. This is bad for employers and carriers if this is signed by Governor Hochul and could have a far-reaching impact on matters which have already been reduced to an award for permanent disability.
Relevant Text of Bill S.768:
New definition of temporary total disability:
Temporary total disability. In case of temporary total disability, WHICH SHALL CONSIST OF THE INJURED EMPLOYEE’S INABILITY TO PERFORM HIS OR HER PRE-INJURY EMPLOYMENT DUTIES OR ANY MODIFIED EMPLOYMENT OFFERED BY THE EMPLOYER THAT IS CONSISTENT WITH THE EMPLOYEE’S DISABILITY, sixty-six and two-thirds per centum of the average weekly wages shall be paid to the employee during the continuance thereof, except as otherwise provided in this chapter.
Current Status:
PASSED both the Assembly and Senate in New York.
There are two paths the bill then takes, depending on whether or not the Legislature is in session or not.
If the Legislature is in session, the Governor has 10 days (not counting Sundays) to sign or veto bills passed by both houses. Signed bills become law; vetoed bills do not. However, the Governor’s failure to sign or veto a bill within the 10-day period means that it becomes law automatically. Vetoed bills are returned to the house that first passed them, together with a statement of the reason for their disapproval. A vetoed bill can become law if two-thirds of the members of each house vote to override the Governor’s veto.
If a bill is sent to the Governor when the Legislature is out of session, the rules are a bit different. At such times, the Governor has 30 days in which to make a decision, and failure to act (“pocket veto”) has the same effect as a veto.
Because the Legislature is out of session, once this bill is “delivered” to the Governor, she can do the following:
- Sign the bill into law.
- Veto the bill;
- Do nothing, which as the impact of vetoing the bill if she fails to sign it (30 days of inactivity is a pocket veto).
If vetoed, it goes back to the Assembly, where it can become law if two-thirds of the members of each house vote to override the Governor’s veto.
Currently, efforts are underway to persuade the Governor to veto this bill.
Why It’s Bad for Employers and Insurers
Impact on Workers’ Compensation Cases
Changes the Legal Requirement for Claimant to Look for Accommodated Work
Currently, “temporary total disability” means that the claimant can not perform any work in any job. This is a high threshold for the claimant to demonstrate. To show they are totally disabled, the claimant has to prove they can not do any work activity, which includes sedentary work. It also includes work that differs from the type of work that the claimant did pre-accident. As the law currently stands, if the injured worker can do any work offered by any other employer means that the claimant has a less-than-total disability.
Where the claimant has a less-than-total disability, the Workers’ Compensation Law imparts an affirmative duty on the claimant to both seek and accept work within their medical restrictions. In effect, the inability of the pre-accident employer to create or offer an accommodated job does not eliminate the claimant’s duty to seek work within their medical restrictions, even if that work is offered at a different employer, in a different market segment, or in a totally different occupation.
The current state of the law allows the employer to argue that a less-than-totally disabled claimant who does not seek work elsewhere is not entitled to ongoing wage replacement benefits, because they fail to demonstrate attachment to the labor market.
The “attachment to the labor market defense” is one of the key tools we have to limit indemnity payments in New York.
The new definition of temporary total disability would eliminate the requirement that the partially-disabled claimant has to seek work within their restrictions in cases where the employer can not offer either
- A return to pre-accident work duties; or
- An accommodated job that fits the claimant’s medical work restrictions.
It appears to eliminate the claimant’s obligation to look for work in other occupations, market segments, or with other employers who can offer work that fits within the medical restrictions set by the treating or examining physician. This, in turn, appears to eliminate the legal tool (demand by the defense that the claimant show attachment to the labor market) which is commonly deployed to limit the amount of wage replacement benefits in a litigated workers’ compensation case.
Impact on Employers & Insurers
This law will significantly impact employers, and particularly those who due to small size or the nature of the work, can not reasonably offer accommodated work positions. Example of this include:
- Small employers who do not have the need or human resource capacity to create tailored accommodated light duty work positions.
- Employment settings that cannot accommodate partially disabled employees due to safety or other concerns.
- Employers in industries where union or contractual “fit for duty” requirements eliminate the potential of accommodating a partially-disabled claimant for safety reasons
This law will significantly impact insurers who provide coverage to smaller employers and employers who do not have the ability to offer accommodated work.
Cost & Impact Examples
Here are hypothetical examples showing what cost and litigation impacts the new law has in situations where:
- (Under the Current law) the Employer CAN Accommodate Restrictions
- (Under the Current Law) the Employer Can NOT Accommodate Restrictions
- (Proposed Law) the Employer Can NOT Accommodate Restrictions
All of our examples will rely on the same basic claim facts, only the applicable law is changed.
After examining these three examples, which assume (a) a motivated claimant who wants to return to work and (b) that the treating physician actually releases the claimant to full duty work, we look at the more likely scenario (“Likely Real World Impact: Open Cases”) which takes into account the more common (litigated) experience of (a) an employee not motivated to return to work, and (b) a paternalistic, claimant-selected physician who does not provide a return-to-full-duty release.
Finally, we will look at the likely impact on closed cases, which in this context mean claims which have been resolved by way of award for permanent disability benefits (after 2012 all permanency awards are limited in duration to no more than 525 weeks) which will demonstrate how claimants can utilize the new law to defeat the durational limits to the already-settled awards as well as increase their weekly benefits (for life).
Current Law: Where the Employer Can Accommodate Restrictions.
Claimant Smith, a warehouse laborer, is injured at work on July 1, 2022. Her pre-injury wages were $2,000 per week, which qualifies her for a maximum temporary disability benefit of $1,125.46 per week. Her attending physician find that she is able to return to light duty work on August 1, 2022, with restriction of not lifting more than 25 pounds, and no twisting, kneeling, or standing for more than 10 minutes at a time. Her doctor also states that she can only work a four-hour shift (instead of the normal 8 hour shift).
Smith returns to the employment where her employer makes accommodations. She works 4 hours per day and consequently earns half ($1,000 per week) of her pre-accident wage.
After six months of accommodated work, she returns to full-duty work.
The workers’ compensation indemnity benefit in this situation would be:
- First four weeks at the maximum compensation rate: $4,501.84 ($1,125.46 x 4)
- Next Five months at a reduced earning compensation rate: $13,200 ($660 x 20)
- Total indemnity paid: $17,701.84
Current Law: Where the Employer Can NOT Accommodate Restrictions.
Claimant Smith, a warehouse laborer, is injured at work on July 1, 2022. Her pre-injury wages were $2,000 per week, which qualifies her for a maximum temporary disability benefit of $1,125.46 per week. Her attending physician find that she is able to return to light duty work on August 1, 2022, with restriction of not lifting more than 25 pounds, and no twisting, kneeling, or standing for more than 10 minutes at a time. Her doctor also states that she can only work a four-hour shift (instead of the normal 8 hour shift).
Smith’s employer cannot offer accommodated work. Her employer cannot return her to her pre-accident position.
On August 1, 2022, Smith’s employer, through its insurance carrier, raises “Labor Market Attachment” and demands that the claimant seek work elsewhere within her working restrictions. On August 15, 2022, the claimant is directed by the Workers’ Compensation Board to seek accommodated work elsewhere, utilizing the New York State “One Stop” career counseling system, job bank, and via independent job search.
The claimant fails to demonstrate an active search for work within her restrictions. No documentation of registering a resume with the New York State “One Stop” system is produced and no records of an individual job search effort is filed with the Board.
On October 1, 2022, the Board finds that the claimant is not attached to the labor market and ends the claimant’s indemnity benefits, subject to the claimant submitting documentation of a valid job search.
After six months her physician finds that she can return to full duty work.
The workers’ compensation indemnity benefit in this situation would be:
- From Date of Loss to October 1, 2022 at the maximum compensation rate: $13,505.52 ($1,125.46 x 12)
- No indemnity paid after the Board find the employee did not demonstrate labor market attachment.
- Total indemnity paid: $13,505.52
Proposed Law: Where the Employer Can NOT Accommodate Restrictions.
[This assumes S.768 is signed into law]
Claimant Smith, a warehouse laborer, is injured at work on July 1, 2022. Her pre-injury wages were $2,000 per week, which qualifies her for a maximum temporary disability benefit of $1,125.46 per week. Her attending physician find that she is able to return to light duty work on August 1, 2022, with restriction of not lifting more than 25 pounds, and no twisting, kneeling, or standing for more than 10 minutes at a time. Her doctor also states that she can only work a four-hour shift (instead of the normal 8 hour shift).
Smith’s employer can not offer accommodated work. Her employer can not return her to her pre-accident position. The injured worker has no obligation to seek work elsewhere as per S.768.
After six months her physician finds that she can return to full duty work.
The workers’ compensation indemnity benefit in this situation would be:
- From Date of Loss to Release to Full Duty Work at the maximum compensation rate: $27,011.04 ($1,125.46 x 24)
- Total indemnity paid: $27,011.04
Likely Real World Impact: Open Cases
In the New York workers’ compensation system, the claimant chooses their own treating physician and the employer/carrier is not allowed to interfere with the selection. In litigated matters, the claimant does not generally choose the “best qualified” or “best credentialed” physician – they choose the physician that their attorney sends them to, who is likely to be more paternalistic and claimant-friendly and much more likely to find an ongoing medical impairment than a non-workers’ compensation doctor.
In the example above, the treating physician eventually found that the claimant’s condition had reached maximum medical improvement and that the claimant could return to full-duty work. Unfortunately, in our system, it is vanishingly rare for a claimant-selected treating physician to find that the claimant has reached MMI and has not ongoing temporary disability; more commonly, we litigate that issue.
To litigate this, our system relies heavily on the use of Independent Medical Examinations to both assess the need for specific treatments and to provide a second opinion as to the nature and extent of disability (if any). These are both costly and time-consuming in this jurisdiction, and generally require formal litigation (usually in the form of deposition testimony) to introduce into the workers’ compensation record.
We therefore expect that in addition to significantly longer period of temporary total disability awards being made to claimants, significant litigation expense will be incurred in challenging ongoing disability determinations in litigated cases.
Likely Real World Impact: Closed Cases
Let’s turn to cases that have been resolved by way of a finding of permanent residual disability (“loss of wage earning capacity” awards).
New York Worker’s Compensation law allows for a permanently-disabled claimants to collect temporary total disability benefits even after their permanent disability has been adjudicated. For example, a permanently disabled claimant who is receiving a weekly benefit of $500 per week representing a less-than-total permanent partial disability who undergoes a related surgery and has a short period of temporary total benefits during post-surgical convalescence (for this example, $1,000). Under the new law, once that happens, the employee would merely have to show that they can not return to the pre-injury job (despite the fact they were already found to have a permanent residual disability) and would then be able to collect $1,000 per week for life. Increasing this impact on exposure is that fact that since 2012, award for less-than-total permanent disability have been capped at no more than 525 weeks. Essentially, a subsequent period of total disability would increase both the weekly award and remove the durational cap.
Questions?
Contact Greg Lois (cell 201-400-2599) or glois@loisllc.com to discuss.
