Wednesday, June 29, 2016

Happy NY Hike

My mother taught me it is not nice to take delight in other's misfortunes, but New York's proposed 9.3% rate hike does cause a little giddiness.

Yesterday the New York Department of Financial Services took testimony both for and against the proposed increase.


The financial sector, a strong sector of that state's economy, is for it; labor says it is just a scapegoat to take more benefits away from workers.

“It’s actuarially sound,” said Lev Ginsburg, director of government affairs for the Business Council of New York State. “Therefore, as much as we’d like it to be lower, it is necessary for market stability.”

Labor put a different spin on the proposal, that it “is based on the premise that the costs of workers’ compensation are continuing to rise, and that as a result, employers must pay more as well,” said Nadia Marin-Molina, associate director of the New York Committee for Occupational Safety and Health and the Workers Protection Coalition, a premise Marin-Molina disputes.

She says more blame needs to be laid on the marginal employers mis-classifying employees as independent contractors, which costs the state's system $6 billion / year in premiums and marginalizes even further the entire system.

Part of the blame, according to rate hike proponents, is due to the 2014 dismantling of the Special Fund for Reopened Cases, which pays for non-indemnity claims where medical is left open, and require further funding. Though that fund was closed a recent appellate court ruled that doing so was unconstitutional, because it shifted $1.1 billion to $1.6 billion on carriers that not had not factored those losses into their rates or reserves.

That case has since been appealed to New York's highest court, the Court of Appeals, and is awaiting review.

New York has some unique laws that go outside workers' compensation, principally in the construction industry. Labor Law section 240, known as the scaffolding law, deals with height based injuries, and section 241 deals with non-height related construction injuries.

Both were enacted at a time when New York was bustling with construction, ergo construction related injuries and deaths, and was seen at the time as an important safety motivator for contractors and construction companies.

Today, those laws provide tort remedies that would make most any opt-out proponent cringe with surprise and indignity.

But that's the state's culture. New York is a high cost state to live in, to do business in, and in which to employ people.

While the rest of the nation, even California, is moving in the opposite direction, New York is not only proposing a rate increase, but a significant one at that.

Is it possible that New York will eclipse California as the poster child for bad a workers' compensation environment?

The Department of Financial Services is expected to rule on the proposed rate increase, or ask the rating board to amend it, by July 15. We'll find out then...

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