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2017 Proposed Guidelines for Determining Impairment

The Workers’ Compensation team at KBM Management recently reviewed the proposed NYS Workers’ Compensation Board “Guidelines for Determining Impairment” (Guidelines) issued on September 1, 2017. The information below outlines some of the more significant changes in the pending legislation.

Our foremost concern is for the employers in NYS who have already experienced significant increases in cost due to the reforms in 2007. If the Guidelines are approved, we expect the fully insured employer will see further increases in their Experience Modification calculations, which in turn will increase their premiums. In the self-insured arena, employers should expect to see an increase in their case reserves, which will increase their IBNR. In addition, all NYS employers can expect an increase in costs associated with litigation and surveillance. Most importantly for the self-insured, paid claims could increase at the same rate as liabilities once the reserves are at the point of payment.

If the proposed Guidelines are approved, significant changes in claim costs can be expected, too. Additional considerations will be required on most Scheduled Loss of Use (SLU) awards that would add to the overall award. These will include “pain,” “loss of strength,” “loss of range of motion” and “loss of earning power.”

Surprisingly, “pain” would be recognized as part of the permanency evaluation allowing an additional percentage to be awarded to the injured worker. This contradicts decades of Workers’ Compensation Law which dictated that pain and suffering is not intended to be compensated. While the proposed guidelines state this is not the intention, a “pain rating” is assessed by the physician that could increase the overall award. Additionally, Law Judges will be given the same freedom to award up to another 5% for pain on top of the physician’s opinion.

As mentioned above, the proposed Guidelines also provide consideration for “loss of strength” and “loss of range of motion.” The physician and Law Judge will both be able to apply another 5% for each of these components. When combined with “pain,” the physician and Law Judge will have the ability to increase the award an additional 30%. The Board has yet to provide clarification on determining the impairment award percentage related to the “loss of earning power,” however, the proposed range is 0 to 15%.
Furthermore, and to paraphrase what the Board is recommending, when there is medical evidence for residual pain of three, or greater, on a scale of zero to five, the Law Judge will be given liberties to conclude that the injury is not amenable to a SLU. Inevitably, this will result in an increase in reserve exposure.

To complicate matters further, impairment categories break down as follows: “A” (0 to 30 percent), “B” (30 to 60 percent), and “C” (60 to 90 percent). The lowest potential of a category is the baseline for the schedule loss of use award. For example, if the injured worker has a category B diagnosis, then the base schedule is 30 percent with the potential of having up to an additional 15% assessed by both the physician and the Law Judge. To put this into perspective, an injured worker could walk away with a minimum of 60 percent schedule loss of use award. If loss of wage earning power is included in this example, the minimum award jumps to 75%.

Our review and interpretation of the proposed Guidelines by the WCB is intended to provide a cursory review of the draft legislation. We expect the Board will revisit the proposed Guidelines, after the public comment period, and are hopeful they will revise the draft legislation to address the potential consequences detailed above. In addition to the protection of injured workers, consideration should be given to how these changes will affect the financial position of employers in New York State, including public entities and municipalities that are restricted to tax caps and budget constraints.

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