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In a major push for the first comprehensive overhaul of workers’ compensation in a decade, business representatives Wednesday characterized the current system as one that benefits no one, harms everyone and fails to deliver on its promise to provide reasonable, prompt recovery. But labor leaders note that benefits have remained static since 1992, and suggest that the current reform movement is weighted far too heavily toward business — especially insurance carriers. Workers’ compensation could emerge as one of the key issues of the legislative session as Gov. George E. Pataki, who promptly tackled the matter shortly after taking office in 1995, is again promoting structural changes. In the mid-1990s, Pataki went to the mat to get his way on workers’ compensation reform, refusing to negotiate the budget until the Legislature adopted his proposal. It is unclear if he will push that hard this year. But the governor did include in his lame-duck budget proposal provisions the administration says are aimed at establishing a more objective and fairer system for both businesses and workers. Pataki’s proposal would create criteria for determining an injured worker’s level of impairment, cap the number of weeks a worker could collect on a permanent partial disability and reduce employer assessments. It would also make injuries incurred during the commission of a crime non-compensable, add dental care and prosthetic devices as covered treatments employers would have to provide, expand the power of the Workers’ Compensation Board chairman to remove physicians who exploit the process, allow insurers to dictate the use of a particular pharmacy or diagnostic/radiologic network, increase penalties on employers who fail to secure entitlements for their injured workers, and assure payment if the insurer issuing a workers’ compensation related annuity goes broke. The governor contends his proposal would reduce premium rates by 21 percent the first year and 15 percent thereafter, while increasing worker and death benefits by 25 percent. Advocates say the projected $1 billion first-year savings would go a long way toward reforming a “broken” system they say is responsible for thousands of lost jobs. At a press conference, three business organizations and several businessmen made clear that workers’ compensation reform is high on their election-year agenda. ‘EXORBITANT’ COSTS “Too many jobs have left New York State and too many more employers have to lay off employees and cut benefits because they are spending money on Workers’ Compensation costs that are exorbitant when compared to every other state in the country,” said Lawrence T. Gilroy III, chairman of the New York Workers’ Compensation Action Network and president of an insurance company near Utica. Gilroy’s firm, Gilroy Kernan & Gilroy Insurance, sells workers’ compensation policies. Gilroy said New York’s workers’ compensation costs are the second highest in the nation, behind only Louisiana, and at the same time one of the lowest benefit levels in the country. Gilroy was joined by Mark Alesse, state director of the National Federation of Independent Businesses, and Elliott Shaw, director of government affairs for the Business Council of New York State. All said the system, designed with good intentions, is no longer workable. “New York businesses pay much more than businesses in competitor states for Workers’ Compensation insurance, they are not as [motivated] to create safer workplaces because even when they do their premiums go up,” Alesse said. “The system is a fundamental and inescapable cost of doing business which directly affects the ability of this state’s economy to create jobs.” Shaw insisted that both employers and employees are “equal stakeholders” in reform. LABOR SEEKS ‘COMPROMISE’ Mario Cilento of the New York State AFL-CIO said organized labor is just as keen on reform as the business community, albeit with a different focus. “We would like to come to a reasonable compromise for both sides,” Cilento said. “But more often than not, their path to a solution means taking money away from injured workers.” Cilento suggested the insurance industry has become far too involved in workers’ compensation, and much more involved than originally intended. He said businesses should look not only to their injured workers, but also to their insurance carriers, for relief. “No one disputes that premiums are high,” Cilento said. “Everyone understands that injured workers haven’t gotten an increase since 1992. The question is: Where is all this money going? How much profit do the insurance carriers in this state make? I think it is a valid question. If the insurance industry would answer it, we’d maybe begin to find a way to come to a solution.” Cilento said one study showed that, nationally, insurance carriers make a profit of about 6.6 percent on their workers’ compensation policies. But in New York, he said, insurance companies make nearly 10 percent. But Michael Moran, spokesman for the American Insurance Association, said Cilento’s criticisms are misdirected. He said premiums are high because the cost of Workers’ Compensation in New York is high. He also said the insurance industry this year sought higher premiums to cover their expenses, but the state Insurance Department would not approve an increase. Additionally, Moran said self-insured employers are facing the same problem as commercial carriers. “New York comp costs are among the highest in the nation,” Moran acknowledged. “And they are high in part because we don’t have a durational cap on permanent partial disabilities. That is a huge cost driver in the New York system.” Daniel L. Feldman, executive director of and general counsel to the New York State Trial Lawyers Association, questioned whether Pataki’s proposal would equally benefit workers and employers. He described the proposal as “just one more effort to make rich people richer and poor people poorer.” “If you look at the numbers, payouts to workers in the past five or six years have gone up maybe one or two percent,” Feldman said. “A ‘reform’ which would make it harder for workers to get money is not addressing the problem. We are not denying — I don’t think anyone is denying — that employers are feeling additional heat on this. But they are not feeling it because workers are getting more money.”

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