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New York Law Change: Protecting the Employer’s Right to Credit

In April 2017 the New York Legislature amended WCL § 15(w) to provide that a credit will apply to the statutory cap for permanent partial disability claims if temporary partial benefits are paid beyond 2.5 years (130 weeks). This is good news for employers and carriers in New York who should see several benefits from this law change. This article and the live question-and-answer webinar we have scheduled for August 14th is to help risk professionals, adjusters, and employers protect their right to this credit which will begin in some cases as early as October 9, 2019.

What the Law Says

Section 15(w) states as follows: “Beyond one hundred thirty weeks from the date of accident or disablement, all subsequent weeks in which compensation was paid shall be considered to be benefit weeks for purposes of this section, with the carrier or employer receiving credit for all such subsequent weeks against the amount of maximum benefit weeks when permanent partial disability under this section is determined .”

The law clearly states that all benefits weeks after 2.5 years “shall be” considered a payment of permanent partial disability. The use of the term “shall” means that the Judge of Compensation lacks discretion to find otherwise.

The changed law also provides a “safety valve” which is a loop hole meant to ensure that temporary partial disability benefits can be extended beyond the 2.5 years if the claimant has not reached maximum medical improvement (“MMI”). The “safety valve” provision provides as follows:

[After 130 weeks] and “when permanency is at issue, and a claimant has submitted medical evidence that he or she is not at maximum  medical improvement, and the carrier has produced or has had a reasonable opportunity  to produce an independent medical examination concerning maximum medical improvement, and the board has determined that the  claimant  is not  yet at maximum medical improvement” [the Board can extend benefits].

In other words, where the claimant continues to claim, two-and-a-half years after the work accident that she has not reached maximum medical improvement, the Law Judge may determine that MMI has not been reached and that the employer does not get a credit. The Law provides that the carrier gets a reasonable opportunity to produce an independent medical examination. The Judge of Compensation will then make a determination as to whether or not the claimant is at MMI.

We expect claimants to resist the application of the credit.

When the Law Applies

There are limitations on the extent of the credit available under the new law. First, 2.5 years must elapse from the date of accident or disablement. The new law providing a credit applies to cases only after 130 weeks have elapsed.

Next, the date of loss must be after the law was effective. The credit applies cases with dates of loss or disablement after April 10, 2017.

For injuries falling under this new law, the Judge is instructed to provide a credit in favor of the employer for temporary disability benefits paid where the “safety valve loophole” does not apply.

Why This Is Good For Employers

The application of this law should reduce overall indemnity exposure for employers. The intent of this change in the law is to address the common situation in New York where claimants, who can choose their own treating physicians and direct their own care, will select physicians with well-known histories of finding claimant “totally” or “markedly” disabled for long periods of time. Before the reforms of 2007 this behavior was tolerated because the weekly benefits rates were very low – maxing out at $400 per week. Since that time the weekly maximum indemnity rate has steadily increased (see our chart here) and is now $934.11 per week. Cases where the claimant has not had significant injury, where there has been no invasive or extraordinary care (for example, no surgery), where the claim is based on subjective complaints and there are long periods of temporary disability – extending beyond 5, 6 or even 7 years – are not uncommon in New York.

This Law change was meant to address those types of cases directly.

How The Claimants’ Attorneys Will Thwart the Credit

Unfortunately, the law providing a credit against permanent disability exposures from temporary disability payments is not without a loophole. While the so-called “safety valve” allowing the claimant to keep the partial disability benefit with no credit to the employer for extended disability is meant to protect the most severely injured workers, in practice we know the loophole will be abused by the claimants bar and interpreted by lax judges to apply in nearly all cases unless and aggressive defense is mounted. We expect that claimants will attempt to thwart the purpose of the law in the following ways:

  • By testifying that they are considering further care, or that “my doctor tells me I may be a candidate for a future surgery” to persuade a Law Judge that all curative medical options have not been exhausted and that they are therefore not at Maximum Medical Improvement;
  • Seeking paternalistic, “claimant-friendly” and physicians well-known for their propensity to find the claimant totally disabled and recommend unnecessary procedures;
  • By disputing their ability to return to even partial employment, and
  • By pursuing further unnecessary care and perhaps even surgical procedures to avoid being found to have reached maximum medical improvement.

So, what can we do to make sure the purpose of the law is not thwarted?

Best Practices for Risk Professionals

1. Red Flag Your Eligible Cases.

The law applies to cases with dates of loss on or after April 10, 2017. Red flag these cases in your risk management and case management systems so that if you are paying temporary disability benefits on or after October 9, 2019 the proper steps can be implemented to protect your credit!

2. Keep the Definition of MMI Handy

First, the Board has has updated and revised the definition of “MMI” in the past decade. While the current Medical Treatment Guidelines published by the Board does not contain a definition of “maximum medical Improvement” the draft Guidelines did:

“[T]he claimant has reached maximum medical improvement, [when] (a) the claimant has recovered from the injury to the greatest extent that is expected and (b) no further improvement in his or her condition is reasonably expected. The need for palliative or symptomatic treatment does not preclude a finding of maximum medical improvement.

Source: Draft DDG, Sept 2017.

This definition has found its way into the Regulations covering medical treatment, and is found at 12 NYCRR 324.1(e), which states:

Maximum Medical Improvement (MMI) means a medical judgment that
(1) a claimant has recovered from the work injury to the greatest extent that is expected and
(2) no further improvement in his or her condition is reasonably expected. The need for palliative or symptomatic treatment does not preclude a finding of MMI. In cases that do not involve surgery or fractures, MMI cannot be determined prior to six months from the date of injury or disablement, unless otherwise agreed to by the parties.
A finding of maximum medical improvement is a normal precondition for determining the permanent disability level of a claimant.

Because the Law Judges were not enforcing this standard consistently, and often finding that maximum medical improvement was not reached where the claimant made statements like “I am considering further medical care” or “my doctor has told me that surgery could be in my future” in 2013 the Board issued a Bulletin instructing the law Judges as follows:

“The mere assertion of the possibility of future surgery is not a bar to MMI. The appropriateness of surgical intervention should be evaluated in light of applicable Medical Treatment Guidelines. A claimant must not only qualify for surgery but also have specific plans for surgery, including an active request for pre-authorization, if required. Judges may evaluate the credibility of the claimant or provider who asserts the possibility of future surgery, based on such factors as history of treatment, prior requests for surgery, etc. If MMI is deferred because of surgery, the claim will be followed to ensure that surgery occurs and the claim is reconsidered following post-surgical rehabilitation.”

Source: Board Bulletin 046-548, May 28, 2013

In other words, the typical gamesmanship employed by claimants in the past to persuade the law Judge that there is a “maybe, someday” surgery or potential curative treatment course out there that the claimant is either mulling over or about to pursue should be met by defense counsel with strong advocacy that the Law Judge follow the definition of MMI found in the law and not put off a finding of MMI based on purely speculative potential medical treatment that the claimant has made no effort to schedule or undertake.

3. The Defense Bar Should Argue that the Law Contains Presumptions in Favor of the Employer’s Credit that the Claimant Must Overcome.

When these cases come before a Law Judge for adjudication the defense trial attorney must be prepared to argue forcefully in favor of the employer’s credit being applicable. Given the experience of how the Board has previously interpreted and applied reform statutes unfavorably for employers, defense counsel must be ready to argue strenuously and create strong record for appeal.

The record for appeal should focus on the following factors:

  • That the statutory presumption is that the employer SHALL get a credit. The word “shall” is a powerful one: it means that the Judge lacks discretion to avoid the clear command in the law that weeks after 2.5 years should be a credit against the permanency award.
  • That the law specifically requires that the CLAIMANT produce medical evidence that he or she is not at maximum medical improvement. Defense counsel should not allow the claimant to make “mere allegations” about the need for future care or speculate about potential future surgery.
  • That the employer has an OPPORTUNITY to obtain an independent medical examination on the issue of maximum medical improvement.
  • The Law Judge must make a determination on MMI.

Risk professionals and defense counsel should be prepared to make all of these arguments at trial so that the Appellate Division can make strong case law in favor of this credit.

4. Be Prepared to Obtain Independent Medical Examinations to Show That Maximum medical Improvement has Been Reached.

Independent Medical Examinations may be necessary to show that maximum medical improvement has been reached. The employer must be provided with a “reasonable opportunity” to obtain an IME on this issue. In practice, it is very rare for a claimant’s selected “treating” doctor to ever find the claimant to have reached MMI. In practice, IMEs are regularly relied upon in New York to end useless, palliative, and non-curative treatment courses.

5. Use the Credit as a Strategic Opportunity to Explore Settlement.

Use the pending credit timeline and potential overall reduction in indemnity award as leverage to negotiate towards a favorable compromise with the claimant. The credit is applicable in a certain group of cases (those with dates of loss after April 10, 2017) and becomes effective on October 9, 2019. Right now there is no case law or judicial decisions on the credit and this legal uncertainty may create a window for both sides to consider settling a case. In addition, the law change create a litigation opportunity for cases as they enter their 130th week: it should be a regular practice to be setting up cases for a MMI challenge and demand for credit at the 130th week, which will create an opportunity for compromise.

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New York Workers’ Compensation Defense at Lois Law Firm

We represent insurance carriers, self-insured employers, third party claim administrators, and employers before the New York State Workers' Compensation Board. We handle cases from cradle-to-grave. We want to be by your side, moving cases aggressively to closure from the start of litigation all the way through to settlement.

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