May 30, 2013

The New York State Workers' Compensation Board announced on May 28 efforts to promote PPD classifications to clear a backlog of claims awaiting a finding of permanent partial disability and is threatening fines and other actions against parties who drag out the process.  The new plan calls for WCB’s judges to evaluate seven criteria for awarding fees to claimants' attorneys at the time a worker is classified PPD and establishes the normal time frame for a worker to reach maximum medical improvement as two years from the date of injury.  Parties will have to provide medical evidence to document the need to delay declarations of MMI for more than two years under the PPD plan.  Robert Beloten, chairman of the WCB, said that attempts to delay PPD are “based on alleged new injuries or the possibility of surgery, when none exists.”

Beloten's bulletin casts blame across a wide spectrum of the workers' compensation system and concludes:

• Treating physicians ignored a post-reform requirement that they provide medical evidence needed for the classifications through Form C-4.3, the Doctor's Report of MMI/Permanent Impairment. Beloten said doctors ignored the requirement despite specific fees allowed for completion of the form and despite specific directives from the board requiring the forms to be completed.
• Private carriers have been the "slowest parties" in contested cases to push for classification. The board said insurers may have delayed the process because of a requirement that they deposit the present-day value of PPD claims into the state Aggregate Trust Fund.
• Claimants' attorneys have delayed the classification of their clients – and the imposition of duration caps – by contending that cases are in settlement discussions or that the injured workers have not reached MMI "many years after the injury."

Beloten said the board will dedicate some of the state's more than 90 workers' compensation judges to handling PPD classifications exclusively. He warned the board will fine attorneys for both carriers and claimants each time they fail to submit the required forms.
Board spokeswoman Rachel McEneny said each of the state's 29 hearing locations will include at least one PPD judge in a transition that began earlier this month. She said state law allows judges to levy fines of up to $250 each time a party delays conclusion of a contested workers' compensation case.

The New York Compensation Insurance Rating Board cited the delays as a significant driver behind its recommendation for an 11.5% increase in lost costs last year. Gov. Andrew Cuomo and state Financial Services Superintendent Benjamin Lawsky denied the increase. NYCIRB earlier this month asked Lawsky to increase loss costs by 16.9%, but has not made details of the cost-drivers public.

Beloten said that fees for PPD classifications should in no case be based solely on the amount of the award. The board will require the new PPD judges to query claimants on the quality of legal services they received when the claimants are present at PPD classification hearings.

It seems that carriers are better of agreeing to a Section 32 in these cases before they hit the Aggregate Trust Fund.  Once that happens, it seems that the carrier will continue to pay any future medical benefits and a flare-up a year or two later for a new back surgery could be costing the claim additional thousands of dollars.  Furthermore, a Section 32 will usually have less indemnity than the Aggregate Trust Fund deposit amount.  So carriers are probably delaying PPD.  Claimants’ attorneys are also probably following suit because on a Section 32, they are going to make 15% of the settlement, while on a PPD, they are going to make the PPD rate times 10.  So for a Section 32 of $80,000, the claimant’s attorney makes $12,000.  PPD around the moderate rate, say at $400 times 10 is $4,000.  Although, per the above there seems to be a new fee structure that fees will not be paid to claimants’ attorneys solely based on percentage of the award.  Also, the treating physician only makes money if he continues to treat.  The bottom line is that from a claims perspective, it is important for employers and carriers to try to secure Section 32’s as early as possible because the Aggregate Trust Fund has simply added hardships.

American Insurance Association spokesman Ben Tomchik said Wednesday the insurers group was reviewing the board bulletin and was not prepared to comment.

Workers’ Compensation Board’s bulletin is here.

Workers’ compensation premium recovery will help bring down the severe cost of these PPD claims.  As we all know, PPD claims have large dollar figures associated with them and ultimately drive up workers’ comp costs for employers.