4 Ways the New Health Care Regulations May Cause More WC Claims in New York

Consider this: A Big Potential Loophole for Small Self-insured Employers

With newfederal regulationof group medical plans there will be a flood of comp claims adding pre-existing chronic conditions as having been “accelerated or exacerbated” by a comp injury. People age 50+ have a way of getting around restrictions. Medicare won’t care if these conditions are transferred to a workers comp claim. New York State Insurance Fund (NYSIF), of course, would fight, but not a self-insured employer.

Small self-insured employers will have an remarkable loophole. They can unilaterally make payments of medical for themselves, make it compensable, and take the tax deduction. The Board will not be notified if it is a no lost time claim and no one requests a hearing. You don’t need the Board’s permission to make things compensable. In fact, you have to fight to exclude them.

A self-insured employer can make payments at any time without Board approval, and carry the payments as comp, which is fully deductible for tax purposes, and is not taxable to the employee. The advantages are obvious and have been built into the law since it was enacted in 1914. The only way it can be challenged is if the self-insured employer wants to fight it and notifies the Board. Sometimes these payments are referred to as “advance” payments, but that’s a misnomer for the term. (WCxKit)

Self-insured employerscan get the treatment anywhere they want, even offshore. Many of the best New York City doctors are opening clinics in the Bahama. If the employer, or a relative covered as an employee, uses the comp law to get treatment, they can always fly to an offshore medical facility, a fully tax deductible comp expense for the business, even if it’s only for a routine comp exam.

A smaller self-insuredemployer could use this to cover every member of their family and transfer treatment of chronic conditions to workers comp. As long as the claims are for medical treatment only, and not wage loss, there will be no reason for hearings, which in New York are traditionally for wage loss only. Medical issues are by arbitration AT THE REQUEST OF THE EMPLOYER, for self-insureds.

All this can be done by using the liberal comp presumptions at the New York board. There is great potential for smaller employer self-insurance as a way around federal restrictions on treatment and selection of providers. The 1914 workers comp law assumed medical treatment would be provided by the employer without Board oversight. The law favored a presumption that medical care should be part of a claim, not be excluded.

Note: Some strategies work very well for self-insureds and not at all when you have a carrier. This is one of them. This is how self-insureds could misuse the system, a possible negative implication of of the new health care initiative.

The comp law, actually, didn’t provide for automatic hearings when it was started. So, a self-insured is not automatically subject to much scrutiny on claims for a covered EMPLOYER filing his/her own claim. If it’s medical only, there is no reason for having any hearings on non-disputed medical.

That is what makes this work. There is no requirement that the Board has to issue a decision. If a self-insured pays their own claims, they can deduct the payments from the corporate tax return. DON’T PAY THEM THROUGH A TPA!!! It’s not required! (And there is no Board form for reporting medical, only wage loss.) (WCxKit)

If you have a carrier (aka insurance company) – forget all of this. The payments would only go into your X-mod. If the carrier ever paid a single cent.

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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Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers’ comp issues.