Section 15(3) (w) of the New York Work Comp Law, in effect since 3/13/07, provides for lifetime caps on permanent partial disability (PPD) claims. In the past, such claims have accounted for 60%-70% of all attorney fees, without which a comp practice is unsustainable. They also account for the bulk of legal defense fees.
New claims strategies will quickly appear as the first of the capped claims reach max payment on 7/5/11. Employers can anticipate certain strategies and plan to document levels of disability without carrier involvement by employing a methodology which conforms to the goals of the Americans with Disabilities Act (ADA).
In New York, numerous PPD classifications (20,000 settlements/yr ) were a major feature of the law and settlement of such claims was lucrative and essential to the size of the entire system.
However, high comp rates and a depressed economic market drove Albany to find a method of limiting lifetime benefits. Section 32 settlements, for the first time, permitted future medical to be resolved with a one time lump payment. Nevertheless, lifetime caps had to be created for the 75% of PPD claims that were never settled.
The caps alter the strategy of lump-sum and Section 32 settlements. Knowing precisely what the future exposure is and knowing that it will rarely exceed a few years, using the old Board settlement strategies, will disastrously limit attorney fees. It can be anticipated that new strategies will appear and that the principle one will evolve around returning the worker to actual, but low paid, work to lock in a high rate.
Actual work, as opposed to medical opinion about levels of disability, is presumptively correct as a measure of wage loss. The new statute provides for longer lifetime benefits for workers with higher percentages of wage loss.
An employer can anticipate the strategy of return to low paid work by proactive return to work offers beginning weeks, instead of years or months, after the injury. Periods of disability following a New York compensation injury have been known to be multiples of what they are for similar injuries which are not work related, but are covered by a disability plan – the difference being attributed to the fact that comp claims frequently end in a large lump-sum where lost time is ongoing.
From the passage of ADA in 1990, there has been a ticking time bomb created by inconsistent presumptions between ADA and New York work comp. ADA presumes that even the most disabled can work in many capacities given reasonable accommodation. NY work comp for six decades has presumed that even trivial injuries are presumptively totally disabling for years after the accident.
In the 1990s a case in NY was reported where a worker hearing a somewhat offensive remark made at the water cooler by a co-worker was awarded three years of psychiatric total disability and was given a substantial lump-sum settlement. ADA, in effect at the time, would have concluded there was no disability which could not be cured by moving the co-workers to separate rooms.
The employer, by offering return to work in a modified position at nearly full pay or higher, can establish a far lower level of workers comp disability by providing, if need be, reasonable accommodations. The work, observed by co-workers and with documentation of pay and accommodation, creates an almost impregnable proof of substantial wage earning capacity. It also creates an ally in the worker’s family, which rarely is supportive of a non-working member following advice to stay out of work in order to maximize a future settlement.
Legal strategies are generally arrived at in a fact-deficient vacuum. ADA accommodations can fill that vacuum with objective data that will prove invaluable years later when they confront belated efforts to maximize disability.
To be continued: An analysis of projected legal proceedings.
Author: Attorney Theodore Ronca is a practicing lawyer from Aquebogue, NY. He is a frequent writer and speaker, and has represented employers in the areas of workers’ compensation, Social Security disability, employee disability plans and subrogation for over 30 years. Attorney Ronca can be reached at 631-722-2100.
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