In the 2010 Oregon rankings for the cost of comp insurance, New York comes in 13th, with an average rate of $2.34 per $100 of payroll. That does not sound too bad, until you factor in the extraordinary 20.2 percent assessment that is tacked onto premiums. ** This assessment is double that of the nearest state (Minnesota at 8.9 percent) and nearly five times the average among states. When you combine the already high rates for coverage with the assessment, New York ends up near top of high cost states.
Quoting research from the Workers Comp Policy Institute (WCPI), Risk & Insurance Magazine identifies three major components in the assessment:
– the Second Injury Fund, accounting for half the total
– the Reopened Case Fund that covers claims reopened after more than 7 years
– the Workers Compensation Board, which oversees comp in NY
Recent reforms may eventually reduce the impact of the first two cost drivers, but there is no end in sight for the third. New York operates a huge – and largely redundant – bureaucracy to administer comp claims. Where other states empower insurance companies to make decisions on individual claims, with the state involved only in disputes, New York is involved in every step of every claim. The Board has over 300,000 hearings per year, overseen by 97 judges. The system generates 31 million forms annually, all of which are scanned and saved! Stenographers document every proceeding: a well-intentioned effort to pilot the cost-saving use of video recording devices met with ferocious opposition in the state legislature. The Board employs over 1,300 people; as a point of reference, the Massachusetts DIA, in a state with one third the number of workers, has only 167 employees.
The high cost of insurance might be more tolerable if injured workers were the primary beneficiaries, but this is not the case. The maximum weekly benefit in New York is only $740, which might support a frugal worker in upstate New York, but it will not buy much in the five boroughs. By comparison, Illinois – ranked number 3 for cost – has a maximum wage benefit of $1,288, while MA, ranked 46th, pays up to $1,136.00.
New York is stuck in an archaic system that is fiercely defended by the stakeholders who benefit from its inefficiencies. If only this same energy and commitment were devoted to the protection of disabled workers in the Empire State. Surely, that would be a system worth emulating.
**We heard from our friends involved with the Oregon ranking study, who provided the following clarification:
The Oregon WC Rate Ranking study does include state assessment rates in our index rate computation. We ask our state respondents to provide the rates that are assessed as a percentage of premiums. The NY rating bureau provided us that information in 2010, and there was a 14.2% factor included in the study index rate for NY. Apparently the rate has increased since that time, and the 2012 index rates would incorporate that information in our next study, due out this fall.
Unfortunately assessments are an area that does not lend itself to straightforward comparison. States use different terminology (assessment , surcharge, tax, etc), have different bases for assessment, and fund different functions through this mechanism. So there is plenty of room for different interpretations when looking at the data, depending on where the lines are drawn for inclusion or exclusion.
Posts Tagged ‘second injury fund’
New York Comp Assessments: The High Cost of Friction
Monday, April 2nd, 2012Health Wonk Review, Illinois reform, Missouri SIF, mobile risks & more news notes
Thursday, June 9th, 2011Health Wonk Review – John Irvine & Matthew Holt host a hefty edition of Health Wonk Review over at The Health Care Blog – lots of good health wonkery there!
Illinois work comp reform – After all the sturm und drang in the Illinois reform process, we’ve had a breakthrough … a reform bill finally passed on the last day of the legislative session. In a Tale of Persuasion, AP’s Zachary Colman takes you step by step through the painful process. And at Managed Care Matters, Joe Paduda offers an excellent rundown of some of the key provisions in the Illinois work comp reform bill.
In other Illinois news, the matter of $10 million in repetitive stress claims filed by Menard County prison guards has taken some new twists. The Illinois house recently passed a bill requiring the release of the related workers’ comp test records in compliance with the Freedom of Information Act. A report obtained through the FOIA shows that locking and unlocking prison cells didn’t injure the guards.
Missouri’s second injury fund woes – Injured workers in Missouri are being left in the lurch, according to a story in stltoday.com. about the state’s troubled Second Injury Fund Roberto Ceniceros posts more about Missouri’s financially-ill second injury fund.
Mobile risks – Andrew Simpson writes about the increased workers comp exposure as more workers go mobile in Insurane Journal. In the past, the workplace was a clearly defined place and the hours of operation were also clearly defined, but as more and more workers go mobile, things are much less clearly defined – the lines between professional and personal life are blurring. Plus, employers are often supplying the mobile devices to workers, increasing their exposure to claims that occur when off site or off the clock. “Insurance claims professionals say claims made by workers injured while doing things where the relation to their employment is unclear are on the rise and the increasing use of mobile devices is challenging traditional notions of work-related injuries.”
Workplace violence factors – The Workplace Violence Blog posts about the prevalence of workplace violence as evidenced by a Society of Human Resource Management survey, and states that “Approximately $55 billion a year is lost to litigation awards, property damage and lost productivity from workplace violence. It is estimated that productivity can drop as much as 50% in the six to eight weeks following a workplace violence incident.” The post includes seven common organizational factors that contribute tow workplace violence.
Industry growth – Insurance is one industry that is poised for growth. According to a recent research report issued by IBISWorld, employment in TPAs and and claims adjusting is set to grow 5.7% annually between now and 2016. “Other industries in the IBISWorld top 10 fastest-growing for the next few years include sustainable building material manufacturers, multi-family home builders, used car dealers, remediation and environmental cleanup services.”
MRSA facts from the CDC – From the CDC, MRSA and the workplace, including a list of frequently asked questions. Staph infections, including antibiotic resistant MRSA, MRSA skin infections can occur anywhere. However, the CDC notes that some settings have factors that make it easier for MRSA to be transmitted. These factors, referred to as the 5 C’s, are as follows: Crowding, frequent skin-to-skin Contact, Compromised skin (i.e., cuts or abrasions), Contaminated items and surfaces, and lack of Cleanliness. Locations where the 5 C’s are common include schools, dormitories, military barracks, households, correctional facilities, and daycare centers.
Pre-Employment Fibs, Compensability, and Second Injury Funds
Tuesday, October 12th, 2010There is no doubt that Ronald Babin, an electrician in Louisiana, was injured at work. He was in the bucket of a truck, working on a transformer, when the bucket mechanism malfunctioned, crushing the bucket into the transformer for several minutes. Babin huddled in the bottom of the bucket until co-workers were able to gain control of the mechanism. He hurt his back.
This sounds like a straight-forward workers comp case, but Babin ran into a complication. This was not the first time he had hurt his back.He had four prior back injuries involving two herniated discs. At one point he was out of work for nearly two years with back problems.
When he applied for the job with Ernest Breux Electric, he filled out several pre-employment questionnaires. One asked if he had any “current or prior back injuries” (this question could well be illegal, but that’s an issue for another day). He answered “no.” On another form, he admitted to having a “back strain” – but again, did not mention serious disc problems.
Thus, Babin misrepresented his medical history. His employer relied upon that misrepresentation in hiring him. And his subsequent injury was directly related to the condition he failed to disclose. Bottom line for Babin: his claim was denied.
Rock and a Hard Place
One can sympathize with Babin. He probably felt that full disclosure would have resulted in his not getting the job. It is possible, of course, that Breux Electric would have taken the information into consideration and hired him anyway. With clear documentation on the prior injuries, Breux would likely have had access to Louisiana’s second injury fund:
– The applicant had a permanent partial disability
– The employer would have hired him with knowledge of that disability
– The new injury merged with the old injury to produce a claim for the second injury fund
By hiding the truth, Babin essentially was working without a safety net. This might not have mattered if the injury had not aggravated the pre-existing condition. But as soon as his aching back became involved, Babin lost access to the protections of the comp system.
Abolish Second Injury Funds?
Speaking of second injury funds, our colleague Peter Rousmaniere has recommended that they all be abolished. He makes a compelling case. The money in second injury funds is derived from fees paid by all insureds. However, the primary beneficiaries of these funds has not been the employers, who took the risk in hiring disabled workers, but the insurance companies, who generally pocket the payments from the funds. They are not obligated to recalculate experience modifications and return premium dollars to the insureds. Some are diligent about doing this, others are not.
Second Injury funds may not be the most effective means of encouraging employers to hire partially disabled workers. And it’s clear from this particular story that these workers should not try to lie their way into a job. In the best of all possible worlds, disabled workers would not be penalized for their candor in disclosing disabilities and employers would not be penalized for the additional risk of hiring them. But in case you have not noticed, this is hardly the best of all possible worlds.
Special thanks to Work Comp Central (subscription required) for their heads up on this and many other interesting cases.
NY Second Injury Fund: the clock is ticking for recovery opportunities
Monday, April 2nd, 2007Employers and insurers in NY take note: if you have claims with potential for second injury fund reimbursement, your window of opportunity for recouping recovery dollars has narrowed significantly. New York just passed legislation which includes provisions to phase out their fund. Also in the works, South Carolina legislators are discussing a schedule to close their fund as well, bringing a plan that has been under discussion for years one giant step closer to enactment.
New York Special Disability Fund – phasing out by 2010
The New York workers compensation reform bill, which was recently signed into law by Governor Eliot Spitzer, lays out a schedule for shutting the Special Disability Fund (aka Second Injury Fund) to new claims on or after July 1 of this year, and closing the fund down for all new reimbursement claims by July 1, 2010, regardless of date of injury. These are the major legislative provisions, but as the saying goes, the devil is in the details, which the folks at Insurance Recovery Group have explained in greater detail: NY Workers’ Compensation Reform Impact on Second Injury Fund.
South Carolina Second Injury Fund – next up?
After years of debate around workers compensation reforms, the South Carolina Senate and executives of the Second Injury Fund are looking at possible schedules for closing the fund. Some proposals under discussion have this happening by 2013.
More information: For a primer on second injury funds, see our April 2005 post Maximizing recovery: Second injury funds.
